Investor sentiment remains positive amid portfolio reshuffling activities



Uba Group

Last week, the equities market sustained its positive momentum despite the seesaw movement that resurfaced through the week as a result of the portfolio reshuffling exercise by equity investors ahead of more dividend announcements by listed companies.

While the benchmark index moved further towards the 56,000 psychological mark based on its strong momentum, the audited financials and corporate actions are expected to give clear direction to the market notwithstanding the uncertainties associated with the general elections.

The NGX-ASI posted an uptrend in performance by 0.5 percent week on week to 55,794.51 points due to position-taking in some defensive stocks with strong fundamentals. In the same manner, the market capitalization rose 0.5 percent week on week to N30.40 trillion to give investors N145 billion in profits while the year-to-date return inched further to 8.87 percent from 8.35 percent last week.

Across the sectors in the review week, performance was largely on a mixed trend across the indices under our purview.
Thus, there were declines in the Banking, Consumer Goods, and Oil & Gas indices of 1.82 percent, 0.26 percent, and 3.82 percent from the previous week, while positive price movement was seen in the Industrial Goods (+1.71%) and Insurance (+0.70%) indexes through the week as investors posed their expectations for the dividend season.

At the close of the week, the level of market trading activities was in a varying position as we saw the total number of deals decrease by 8.16 percent week on week to 18,650 as stockbrokers recorded a 46.42 percent decline in traded volumes for the week to 1.02 billion units valued at N20.22 billion, indicating an increase of 9.7 percent week on week.

Meanwhile, the top-gaining securities for the week were Julius Berger Plc (+10%), UACN Plc (+8%), and Transnational Corporation Plc (+8%), while the week’s losers were MRS Plc (-19%), Conoil Plc (-19%), and FTN Cocoa Processing Plc (-13%).

In the new week, stock market analysts expect a mixed trend to continue in the market as investors react to the dividend and position for the anticipated financials from primarily tier-1 banks. While market players place their bull’s eye on dividend-paying companies and defensive stocks to protect their portfolios ahead of the governorship election and post dividend adjustment.

“We advise investors to trade companies with sound fundamentals and, as such, should take advantage of price corrections in line with domestic and global trends”, Cowry Asset Management noted in a report.

Also in the just concluded week, values of FGN bonds traded at the over-the-counter (OTC) segment appreciated for all maturities tracked amid demand pressure. Specifically, the 10-year 16.29% FGN MAR 2027, the 20- year 16.25 percent FGN APR 2037, and the 30-year 12.98 percent FGN MAR 2050 debts rose by N1.86, N2.26, and N1.14, respectively; their corresponding yields contracted to 12.36 percent (from 12.93%), 15.35 percent (from 15.73%), and 15.00 percent (from 15.20%), respectively.

However, the yield on the 15-year 12.50 percent FGN MAR 2035 stayed unchanged at 14.68 percent.

Elsewhere, the value of FGN Eurobonds traded on the international capital market depreciated for all maturities tracked due to sustained bearish activity.

Specifically, the 10-year 6.38% JUL 12 2023, the 20-year 7.69 percent FEB 23 2038, and the 30-year 7.62 percent NOV 28 2047 lost USD 0.16, USD 1.20, and USD 1.18, while their corresponding yields expanded to 13.31 percent (from 12.46%), 12.51 percent (from 12.27%), and 12.11 percent (from 11.89%), respectively.

Capital market experts noted that traders’ sentiment will be shaped by the T-bill auction result over the course of the new week. Cowry Research anticipates the 364-day T-bill rate to rise, hence they expect local OTC bond prices to decrease (and yields to increase) this week.