SAT, 12 DEC, 2020-theGBJournal- Nigerian stocks recorded a weekly loss on continued profit-taking and as the market reacted negatively to the uptick in short-term yields at the NTB primary auction.
The All-Share Index ended the week 2.5% lower at 34,250.74 points. Selloffs of DANGCEM (-8.0%), WAPCO (-10.7%), ZENITHBANK (-5.2%) and MTNN (-0.8%) were the primary drivers of the decline with the MTD and YTD return of the index settling at -2.3% and 27.6% respectively.
The performances across sectors were negative, with the Industrial Goods (-5.0%), Banking (-2.9%), Insurance (-1.8%), Consumer Goods (-1.6%) and Oil and Gas (-0.3%) indices recording losses.
Trading in the top three equities namely Jaiz Bank Plc, United Bank for Africa Plc and Zenith Bank Plc (measured by volume) accounted for 894.000 million shares worth N7.077 billion in 4,045 deals, contributing 39.47% and 33.72% to the total equity turnover volume and value respectively.
The Financial Services industry (measured by volume) led the activity chart with 1.884 billion shares valued at N14.933 billion traded in 13,602 deals; thus contributing 83.15% and 71.14% to the total equity turnover volume and value respectively.
The Consumer Goods Industry followed with 116.400 million shares worth N2.817 billion in 3,474 deals. The third place was Conglomerates Industry, with a turnover of 107.803 million shares worth N231.323 million in 897 deals.
We expect the profit-taking and negative reaction to the unanticipated front-end supply from the CBN to be short-lived. Yields in the fixed income market remain relatively unattractive, and we expect this to remain positive for stocks.
However, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.
Global markets
Global stocks were mixed as investors balanced hopes for approvals and distribution of coronavirus vaccines against a near-term surge in cases and hospitalisations. US (DJIA: -0.7%; S&P: -0.8%) stocks were on track to end the week in the red as Wall Street weighed dimming prospects for a coronavirus relief package.
European (STOXX Europe: -0.2%; FTSE 100: +0.8%) shares were mixed as Brexit worries and record virus cases in Germany partially offset gains from US stimulus hopes. Asian (Nikkei 225: -0.4%; SSE: -2.8%) shares closed lower as profit-taking, a flare-up in Sino-U.S. tensions, and worries about policy tightening dented risk appetite. Elsewhere, emerging (MSCI EM: +1.3%) and frontier (MSCI FM: +0.2%) markets were higher, following gains in South Korea (+1.4%) and Vietnam (+1.9%) respectively.
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