Bears hold sway in equities market as investors lose N136bn in seven days



Uba Group

Investments both in the stock and bonds market witnessed a lull in the trading week ended May 12, 2023, with investors losing as much as N136.4 billion in stocks while values of FGN bonds traded at the secondary market were relatively flat for most maturities.

The benchmark index of the local equities market nosedived on bargain hunting activities as investors stood to book profit on the back of sell-offs in some highly priced stocks and blue-chip companies and lower traded volumes and values despite the releases of corporate actions and dividend payments.

As a result, the ASI shed 0.48 percent week on week to 52,214.62 points while the market cap lost 136.4 billion in market capitalisation to N28.43 trillion.

Just as dividend payments provide more money for investors who are reshuffling their portfolios, to reposition in value stocks amid the continued oscillations in rates and yields in the fixed income space especially at the National Treasury Bills Primary Market Auction where all tenors’ rates suffered declines to close at 4.5 percent, 6.44 percent and 8.99 percent for the 91, 182 and 364-day tenors, the market still trades above the 20-day simple moving average. Thus, the market year-to date return skid to 1.88 percent.

Sectoral performance in the review week was a mixed bag as the Oil & Gas index emerged as the top performing index this week with 5.20 percent gain w/w and was trailed by the Insurance and Consumer Goods indices with 1.20 percent and 0.89 percent gains.

On the contrary, the Industrial and Banking indices were the laggards for the week, losing 3.36 percent w/w and 0.99 percent w/w due to sell -off on the index.

The level of trading activities stayed bullish with a positive uptrend in the total weekly deals by 16.9 percent w/w to 27,801 trades.

In the same manner, the traded volumes advanced 21.14 percent w/w to 3.60 billion units while the total traded value inched further by 33.58 percent to N30.49 billion.

At the end of the week, ARDOVA (38%), TRANSCORP (34%) and MULTIVERSE (33%) were the leading gainers for the week while CILEASING (20%), ACCESSCORP (12%) and BUACEMENT (8%) led the laggards’ chart for the week.

Going into this new week, stock market experts at Cowry Research, anticipate a varied investor sentiment to linger on profit-taking and payments for dividend to support buying interest, just as investors react to corporate earnings ahead of markdown dates, April inflation report, MPC meeting and continued outstanding.

Meanwhile, the values of FGN bonds traded at the secondary market were relatively flat for most maturities; the market was range-bound throughout the week, with investors trading cautiously ahead of Monday’s NBS inflation report.

Notably, the yields of the 20-year 16.25 percent FGN MAR 2037 debt and 30-year 12.98 percent FGN MAR 2050 bonds were unchanged at 15.23 percent and 15.83 percent, respectively. On the flip side, the yield on the benchmark 10- year 16.29 percent FGN MAR 2027 note dipped two basis points to 12.73 percent (from 12.84%). While the value of the 15 -year 12.50 percent FGN MAR 2035 paper, lost N1.02 as its corresponding yield climbed to 14.96 percent (from 14.75%).

The value of FGN Eurobonds traded on the international capital market appreciated for most maturities tracked. This was a result of increased bets for a pause in US policy rate hikes, which outweighed the concerns of a stronger dollar (+0.5% w-o-w), an uptick in US treasury (US 12-month Treasury yield is 4.70 percent (+10 bps w-o-w)), and declining crude output.

This week, the Debt Management Office will auction N360 billion worth of bonds, viz., N90 billion (a piece) for the 13.98 percent FGN FEB 2028, 12.50 percent FGN APR 2032, 13.00 percent FGN JAN 2042, and 12.98 percent FGN APR 2050 re -openings.