SAT 17 JULY, 2021-theGBJournal- Bearish sentiments persisted in the local bourse for the second consecutive week, as investors booked profits on bellwether stocks. Cautious trading dominated the local bourse this week as investors await the release of Q2-21 earnings.
Accordingly, the All-Share Index shed 0.1% w/w to close at 37,947.18 points. Consequently, MTD and YTD returns moderated to 0.1% and -5.8%, respectively.
Activity levels were weak, as trading volume and value declined by 25.2% w/w and 10.0% w/w, respectively. Pertinently, sell-offs in bellwether stocks; NB (-3.3%), DANGSUGAR (-2.2%), ZENITHBANK (-2.0%) and BUACEMENT (-0.7%), drove the weekly loss.
The Financial Services Industry (measured by volume) led the activity chart with 732.418 million shares valued at N7.213 billion traded in 9,131 deals; thus contributing 72.62% and 66.04% to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 52.931 million shares worth N170.271 million in 656 deals. The third place was ICT Industry, with a turnover of 52.716 million shares worth N1.806 billion in 701 deals.
A total turnover of 1.008 billion shares worth N10.923 billion in 17,297 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.348 billion shares valued at N12.140 billion that exchanged hands last week in 21,581 deals, according to NGX data.
Trading in the top three equities namely Guaranty Trust Holding Company Plc, United Bank for Africa Plc and Zenith Bank Plc (measured by volume) accounted for 261.741 million shares worth N5.813 billion in 3,498 deals, contributing 25.95% and 53.22% to the total equity turnover volume and value respectively.
Sectoral performance was broadly negative as the Insurance (-1.1%) index led the losers’ chart, followed by the Consumer Goods (-0.9%) and Industrial Goods (-0.3%) indices. On the other hand, the Oil and Gas (+1.8%) and Banking (+0.1%) indices closed in green.
We believe the outcome of the bond auction scheduled to hold next week will shape market sentiments. As a result, we expect investors to trade cautiously while taking positions in stocks with attractive dividend yields ahead of H1-21 dividend declarations, which intermittent profit-taking activities would match. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.
Meanwhile, Global stocks posted mixed performances this week as investors’ sentiments were shaped by (1) a slew of impressive quarterly corporate earnings in the U.S and Eurozone, (2) Fed Reserves Chairman’s dovish comments on monetary policy, and (3) concerns that rising Covid-19 cases will undermine global growth prospects. In the U.S, the DJIA (+0.3%) was set to close the week in green as investors traded cautiously ahead of U.S retail sales data.
On the other hand, the S&P (-0.2%) gave up gains accumulated earlier in the week as higher-than-expected inflation data overshadowed the reaction to upbeat quarterly corporate earnings releases during the week.
Likewise, European markets (STOXX Europe: -0.4% and FTSE 100: -1.4%) extended losses from the prior week as investors became increasingly worried about the spread of the Covid-19 Delta variant and its potential economic impact. In Asia, the Nikkei 225: (+0.2%) and SSE: (+0.4%) were on course for a weekly gain as risks sentiments strengthened after the People’s Bank of China unleashed USD17.00 billion liquidity through OMO amid a cut in the Bank’s reserve-requirement ratio.
Similarly, Emerging markets (MSCI EM: +2.3%) stocks posted robust gains on the back of bullish sentiments in China (+0.4%). In comparison, Frontier market (MSCI FM: -0.1%) stocks declined marginally, primarily driven by the sell-off in the Vietnamese (-3.6%) market.
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