By Chinwendu Obienyi
The improvement in the fixed income (FI) market is responsible for the declining performance of the Nigerian equities market and this is expected to continue next week.
According to market analysts, investors would remain perturbed by the situation coupled with the weak macroeconomic situation in the country at the moment. This is coming after the bears managed to come out top after defeating the bulls in three of the week’s five trading sessions.
Consequently, the All-Share Index declined by 0.2 per cent week- on-week (w/w) to close at 38,808.01 points. As a result, the year-to-date (YTD) loss rose to -4.2 per cent while market capitalisation dropped N25 billion to close at N20.32 trillion.
However, activity levels were stronger than the prior week, as trading volumes and value rose significantly by 42.4 per cent w/w and 17 per cent w/w, respectively. Notably, profit- taking in large-cap stocks; Stanbic, MTNN and Zenith Bank drove the weekly loss.
Sectoral performance was broadly negative, as the Industrial Goods (+0.9 per cent) index emerged as the week’s sole gainer. The Insurance (-4.2 per cent) index led the losers’ chart, followed by Banking (-1.5 per cent), Consumer Goods (-0.6 per cent) and Oil and Gas (-0.3 per cent) indices.
Reacting to the situation of the market, Cordros Capital, in an emailed note to Daily Sun, said: “With the Q1- 2021 earnings season on the horizon, investors will be looking for clues on how corporate earnings will evolve in 2021, given the expected improvement in macroeconomic conditions.
“However, we expect the lull in the market to persist as investors remain perturbed by the rising yields in the FI market. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings”.
For their part, Afrinvest said: “In the coming week, we suspect that the up- tick in fixed income rate may further drive sell-offs in the stock market.”