FRI 20 AUG, 2021-theGBJournal- The local bourse was not immune to the rout in global equities, as losses recorded on the last trading day (Friday: -0.5%) eroded the cumulative 0.4% gain as of the penultimate trading day.
Precisely, selloffs in bellwether — NESTLE (-9.1%) drove the weekly loss. As a result, the All-Share Index declined marginally by 0.1% w/w to close at 39,483.08 points. Consequently, the MTD and YTD return settled at +2.4% and -2.0%, respectively. Activity levels were weaker than the prior week, as trading volumes and value declined by 45.9% w/w and 2.4% w/w, respectively.
Similarly, all other indices finished lower with the exception of NGX Premium, NGX AFR Div Yield, NGX Industrial Goods and NGX Sovereign Bond indices which appreciated by 2.28%, 0.76%, 1.85%, and 0.02% respectively, while the NGX ASeM and NGX Growth Indices closed flat.
Save for the Industrial Goods (+1.9%) index that closed in the green; the Consumer Goods (-6.3%), Insurance (-1.0%), Banking (-0.8%) and Oil and Gas (-0.6%) indices closed in the red.
The Financial Services Industry (measured by volume) led the activity chart with 445.324 million shares valued at N3.676 billion traded in 7,560 deals; thus contributing 51.39% and 29.99% to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 119.649 million shares worth N4.969 billion in 3,424 deals. The third place was ICT, with a turnover of 87.132 million shares worth N1.938 billion in 924 deals.
Overall, A total turnover of 866.544 million shares worth N12.257 billion in 17,291 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.610 billion shares valued at N12.586 billion that exchanged hands last week in 18,622 deals, according to NGX Exchange data.
Trading in the top three equities namely Honeywell Flour Mill Plc, Transnational Corporation of Nigeria Plc and Guaranty Trust Holding Company Plc (measured by volume) accounted for 203.753 million shares worth N 1.964 billion in 2,515 deals, contributing 23.51% and 16.02% to the total equity turnover volume and value respectively.
Thirty-six equities appreciated in price during the week, higher than Twenty-nine in the previous week. Thirty-three equities depreciated in price, lower than Thirty-six equities in the previous week, while eighty-seven equities remained unchanged same as ninety-eight equities recorded in the previous week.
We expect the bulls to regain dominance in the market given the moderation in the prices of bellwether stocks this week amid the declining yields in the fixed income market. However, we do not rule out the possibility of continued profit-taking activities.
As a result, we think the choppy trading pattern that played out this week will persist in the week ahead. Overall, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.
Meanwhile, global stocks suffered huge losses as risk-off sentiment reverberated across the world. This was due to the combined impact of the rapid spread of the COVID-19 delta variant, which ignited concerns about the global recovery and China’s unrelenting series of regulatory crackdowns on big tech companies.
Consequently, US (DJIA: -1.7%; S&P: -1.4%) stocks retreated from the record highs attained in the prior week as investors flocked into safe-haven assets.
In Europe, the STOXX Europe (-2.2%) and FTSE 100 (-2.5%) posted negative performances, as the Federal Reserve stimulus tapering worries and China’s crackdown sparked selloffs.
Asia markets were broadly bearish, with the Nikkei 225: (-3.4%) set for a weekly loss following the rout on Wall Street. Similarly, the SSE: (-2.5%) declined as selloffs in technology shares deepened following increased regulatory curbs on the sector.
Likewise, Emerging markets (MSCI EM: -3.8%) stocks mirrored the downbeat mood across global equities consequent on the losses in China (-2.5%). On the other hand, Frontier (MSCI FM: +0.3%) market stocks posted marginal gains primarily driven by gains in Kuwait (+1.2%).
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