Bearish undertone in blue-chip stocks halts ASI six-week bullish run by 93bps



Uba Group

After six consecutive weeks of upward momentum, the local stock market’s bullish streak came to a pause as the benchmark index experienced a 0.93 percent decline week-on-week, closing at 64,721.09 points.

This dip was attributed to sell-offs and profit booking in high-priced and blue-chip stocks. The cautious sentiment was driven by investors adopting a “wait -and-see” approach, analyzing the recently released July Consumer Price Index of 24.08 percent and its potential impact on market instruments.

Consequently, the market capitalisation of listed equities also witnessed a marginal 0. 42 percent reduction week-on-week, settling at N35.42 trillion compared to the previous week’s N35.57 trillion.

This decline translated to N150.14 billion in losses for investors, yet the year-to-date return of the All-Share Index remained at an impressive 26.28 percent, highlighting the Nigerian market’s resilience amid global uncertainties.

Sector-wise, the Consumer Goods and Industrial Goods sectors were notable gainers, posting week-on-week increases of 2.39 percent and 0.37 percent respectively. Key stocks like TRANSCORP, DANGSUGAR, CWG, CUTIX, and DANGCEM contributed to these gains.

Conversely, the Insurance, Banking, and Oil & Gas sectors experienced declines of 2.17 percent, 2.06 percent, and 0.42 percent respectively.

These sectors were impacted by cautious investor sentiment and sell-offs in select mid and high cap stocks such as ACCESSCORP, UNITYBNK, LASACO, and ETERNA, as investors meticulously evaluated the interplay of market and economic conditions.

Trading activity remained subdued with low volumes and a bearish undertone.

Weekly deals decreased by 3.83% to 29,477 deals. The average traded volume decreased by 2.98 percent to 1.69 billion units, while the weekly average value increased by 13.60 percent to N21.97 billion compared to the previous week’s N19.34 billion.

Amid the negative market breadth, certain stocks stood out. LINKASSURE (+18%), CORNERST (+10%), and WEMA (+8%) emerged as the top performers of the week, drawing the interest of astute investors. Conversely, NEM (-10%), UNITYBNK (- 10%), and ETERNA (-9%) faced declines due to unfavorable price movements.

This week’s market activity reflected a delicate balance between cautious optimism and potential challenges in the investment landscape.

Looking ahead to this new week, the equity market’s trajectory unfolds at the nexus of nuanced factors, encompassing not only bargain hunting and macroeconomic data assimilation but also ministerial portfolio allocation, FX market dynamics propelled by the infusion of a $3 billion cash loan, and the impending earnings releases from prominent tier -1 banks.

Amidst this tapestry, a feeling of careful optimism rules as market stakeholders navigate the intricate curves to take advantage of evolving opportunities within a dynamic investment landscape.

Meanwhile, stock market experts continue to advise investors on taking positions in stocks with sound fundamentals.

In the just concluded week, DMO sold FGN bonds worth N230.26 billion (inclusive of non-competitive allotments) at the primary market auction, viz re-openings: 10-year, 14.55 percent FGN APR 2029 worth N11.93 billion; 10-year, 14.70 percent FGN JUN 2033 worth N5.07 billion; 15-year, 15.45 percent FGN JUN 2038 worth N25.53 billion, and the 30-year, 15.70% FGN APR 2053 worth N187.73 billion.

Given the low demand (bid-to-cover: 1.36x, last: 1.44x), stop rates for the 29s, 33s, 38s, and 53s bonds rose to 13.85 percent (from 12.50%), 15.00% (from 13.60%), 15.20 percent (from 14.10%), and 15.85 percent (from 14.30%), respectively.

In line with the direction in the primary market, yields in the secondary market rose for most maturities tracked.


Specifically, the 10-year, 16.29% FGN MAR 2027, the 20-year, 16.25% FGN APR 2037, and the 30-year, 12.98 percent FGN MAR 2050 bond incurred losses of N1.65, N1.74, and N1.02, respectively, resulting in elevated yields of 13.07 percent (from 12.52%), 15.19% (from 14.90%), and 15.30 percent (from 15.12%).

Meanwhile, the 15-year, 12.50% FGN MAR 2035 paper remained unchanged at 14.00 percent.

Elsewhere, FGN Eurobonds encountered declines across all tracked maturities, reflecting persistent bearish sentiment.

Notably, the 10-year, 6.50% NOV 28, 2027, the 20-year, 7.69% FEB 23 2038, and the 30-year, 7.62% NOV 28 2047 bonds experienced losses of USD 1.08, USD 2.82, and USD 2.16, respectively, leading to expanded yields of 10.93% (up from 10.56%), 11.57% (up from 11.07%), and 11.44% (up from 11.09%).