Stock market analysts have projected a negative outing for Nigerian equities next week and warned investors to shift their focus in fundamental stocks.
This is coming after the momentum in the nation’s bourse weakened at the close of transactions on Friday as the market recorded its first weekly loss for the year following five consecutive days of losses– largest weekly loss since the week ended April 5, 2019 (-4.6 per cent) – bringing the Year-to-Date (YtD) return to +7.5 per cent.
As such, the market capitalisation of the Nigerian Stock Exchange (NSE) dipped by N404.5 billion to close at N14.8 trillion while the All Share Index (ASI) fell by 2.65 per cent to close at 28,843.53 points.
Speaking to Sunday Sun via telephone, a stockbroker, Mr Charles Sakrogha, attributed the market’s negative performance to the policies guiding the economy.
He said: “The stock market’s performance is reflective of policies guiding the economy, but this situation is normal for a market especially an emerging one as we are bound to have profit, as well as losses. There has to be flunctuations in prices because if there is no flunctuation, then it is not a market. What we saw in the previous week was positivity all through so we had expected people to take profit this week”.
Cordros Capital in their weekly assessment of the market, said that the trend witnessed this week is likely to persist as the dual impacts of the weakening sentiment and mixed earnings performances during earnings season are expected to pressure market return.
“Nonetheless, we advise investors to focus on taking positions in fundamentally justified stocks”, they said.
On their part, analysts at Afrinvest said: “We believe that the market would continue this downtrend, especially as earnings released this week has been largely mixed and insufficient to boost investor confidence”.
Meanwhile, performance across sectors was bearish as four of six indices declined. The Insurance and Consumer Goods indices gained 0.9 and 0.1 per cent respectively due to buying interest in Linkage Assurance (+18.8 per cent) and Vitafoam (+10.0 per cent). Conversely, price declines in FBN Holdings (-10.3 per cent) and Wapco (-12.9 per cent) compelled the sharpest losses in Banking and Industrial Goods indices. Similarly, the AFR-ICT and Oil & Gas indices pared 2.5 and 1.1 per cent respectively on the back of sell pressure in MTNN (-4.3 per cent), Eterna Oil (-23.8 per cent).
A total turnover of 1.561 billion shares worth N26.073 billion in 21,444 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.237 billion shares valued at N22.762 billion that exchanged hands last week in 21,156 deals.
The Financial Services industry (measured by volume) led the activity chart with 1.154 billion shares valued at N13.650 billion traded in 11,306 deals; thus contributing 73.93 and 52.35 per cent to the total equity turnover volume and value respectively.
The Consumer Goods followed with 137.115 million shares worth N3.177 billion in 2,908 deals while the ICT industry posted a turnover of 94.464 million shares worth N6.554 billion in 894 deals.
Trading in the Top Three Equities namely, Veritas Kapital Assurance Plc, Zenith Bank Plc and Guaranty Trust Bank Plc. (measured by volume) accounted for 604.668 million shares worth N9.370 billion in 4,069 deals, contributing 38.74 and 35.94 per cent to the total equity turnover volume and value respectively.
Seventeen equities appreciated in price during the week, lower than 32 equities in the previous week. Forty-four equities depreciated in price, higher than 28 equities in the previous week, while102 equities remained unchanged, lower than103 equities recorded in the preceding week.
Investor sentiment weakened as 16 stocks gained while 44 others declined. Linkage Assurance (+18.8 per cent), Neimeth (+17.0 per cent) and Vitafoam (+10.0 per cent) led the gainers while Eterna (-23.8 per cent), Honeywell flour (-17.8 per cent) and ABC Transport (-17.1 per cent) led the decliners.