Analysts predict mixed performance for equities this year
Buying interest in the shares of some bluechip stocks drove the local bourse northward for four consecutive days last week, sustaining the positive trend since the beginning of the week.
Consequently, the All-Share Index and market capitalisation of the stock market appreciated by 2.09 per cent to close the week at 26,968.79 points and N13.019 trillion respectively.
All other indices finished higher with the exception of ASeM Index, which closed flat.
Analysts are of the view that the Nigerian equity market would be a mixed, but promising one this year.
They believed that fiscal and monetary policies, as well as improved earnings, would drive economic and stock market recoveries in 2020.
According to them, the projection is based on market players’ expectations that economic recovery would be propelled by ongoing regulatory initiatives and the government’s reforms.
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion, said: “As we have also noted earlier, for the second consecutive year, the All-Share Index of the Nigerian Stock Exchange (NSE) closed negative in 2019.
“However, the good thing is that the market has corrected itself considerably and stocks began to resist further decline towards the end of 2019.
“Also worthy of note is the trading pattern that changed as a result of the new NSE rules, among others.
“It is, therefore, not out of place to expect that the market’s graph will become flat initially, before pointing northward for the good of equity investors who position in key sectors of the economy and indeed, financial services players.
“We expect a mixed performance on January effect, profit-taking and position-taking as investors take advantage of low prices, ahead of economic data and portfolio managers repositioning for the New Year as the 364-day Treasury Bills rate fell to 5.2 per cent. There are, also, the changing sentiments in the hope of improved liquidity and positive economic indices.
“We expect that Investors would focus on the upcoming full-year earnings season, targeting companies with strong potential to grow their dividend on the strength of their earnings capacity.”
For Codros Capital Limited, “our base case for equities posits muted stock market performance for the year.
“Fundamentals are not strong enough to drive a natural correction in the equities market, however, recent policy directives from the CBN might offer some respite to the domestic bourse in the absence of much needed market friendly reforms.”
Last week, the market opened for four trading days as the Federal Government declared Wednesday January 1, 2020 as public holiday to mark the New Year celebrations.
A turnover of 2.309 billion shares worth N21.675 billion was recorded in 14,906 deals by investors on the floor of the exchange in contrast to a total of 735.702 million shares valued at N7.132 billion that was exchanged in 7,138 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 1.924 billion shares valued at N10.148 billion traded in 9,287 deals; thus contributing 83.31per cent to the total equity turnover volume.
The conglomerates industry followed with 188.538 million shares worth N284.531 million in 530 deals.
The third place was industrial goods industry, with a turnover of 56.007 million shares worth N4.793 billion in 1,304 deals.
Trading in the top three equities namely, Omoluabi Mortgage Bank Plc, Transnational Corporation of Nigeria Plc and Zenith Bank Plc (measured by volume) accounted for 1.131 billion shares worth N3.600 billion in 2,249 deals, contributing 48.98 per cent to the total equity turnover volume and value respectively.
Similarly, 204,300 units of Federal government bonds valued at N237.207 million were traded this week in 4 deals, compared with a total of 1.074 million units valued at N1.283 million transacted last week in 24 deals.
About 44 equities appreciated in price during the week, higher than 31 equities in the previous week and 24 equities depreciated in price, higher than 17 equities in the previous week, while 97 equities remained unchanged, lower than 117 equities recorded in the preceding week.