SAT, 11 JUNE, 2022-theGBJournal| Positive sentiments returned to the domestic bourse this week as investors took advantage of the moderation in share prices last week to make re-entry into sound companies with attractive dividend yields.
A total turnover of 1.831 billion shares worth N19.494 billion in 21,723 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 28.736 billion shares valued at N209.060 billion that exchanged hands last week in 23,688 deals, according to NGX Exchange data.
Thus, the All-Share Index inched higher by 0.6% w/w to close at 53,201.38 points. Precisely, bargain hunting in MTNN (+4.3%), UBN (+4.0%), WAPCO (+3.7%), and PRESCO (+3.0%) drove the weekly gain. Based on the preceding, the MTD and YTD returns for the index increased to +0.4% and +24.5%, respectively.
Trading in the top three equities namely FBN Holdings Plc, Transnational Corporation Plc and United Bank for Africa Plc (measured by volume) accounted for 1.136 billion shares worth N8.323 billion in 2,906 deals, contributing 62.08% and 42.70% to the total equity turnover volume and value respectively.
However, activity levels were weaker than in the prior week, as trading volume and value declined by 93.6% w/w and 90.7% w/w, respectively. Performance across sectors was mixed albeit with a bearish tilt, as the Oil and Gas (+0.7%) and Industrial Goods (+0.3%) indices closed positive while the Banking (-2.1%), Insurance (-1.6%) and Consumer Goods (-0.1%) indices declined.
The Financial Services Industry (measured by volume) led the activity chart with 1.173 billion shares valued at N12.485 billion traded in 10,657 deals; thus contributing 64.07% and 64.04% to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 419.100 million shares worth N607.703 million in 1,095 deals. The third place was The Consumer Goods Industry, with a turnover of 69.680 million shares worth N2.754 billion in 3,158 deals.
Cordros Research analysts say they expect alpha-seeking investors to continue to seek trading opportunities in companies that delivered impressive earnings during the Q1-22 earnings season despite the expectation of an uptick in yields in the FI market.
‘’However, we think the absence of a near-term catalyst will likely skew overall market sentiments to the negative side, particularly as the political space gets heated up. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.’’
Meanwhile, risk-off sentiment was the overarching theme across global markets as rate hike announcements from the European Central Bank (ECB) and worries over the hotter-than-expected U.S. inflation data reignited concerns about global growth.
Accordingly, US (DJIA: -1.9%; S&P 500: -2.2%) stocks stumbled as investors braced up for further rate hikes from the Federal Reserve. European stock markets (STOXX Europe: -2.4%; and FTSE 100: -1.5%) were on course to end the week in the red as investors reacted negatively to the European Central Bank’s (ECB) plan to hike interest rates by 25bps in July.
Elsewhere, In the Asian market, the Nikkei 225 (+0.2%) managed to eke out a weekly gain as the weakening in the yen against the greenback drove bargain hunting in export-oriented shares.
While the SSE (+2.8%) closed in the green territory as hopes of further monetary policy easing and a rebound in tech stocks buoyed sentiments. The Emerging (MSCI EM: +0.6%) and Frontier (MSCI FM: +0.3%) markets stocks were bullish following gains in China (+2.8%) and Nigeria (+0.6%), respectively.
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