NGX exhibits upside potential with 0.22% weekly gains as investors rebalance portfolios



Uba Group

The Nigerian Stock Exchange had a positive week, with the benchmark index advancing by 22 basis points to 65,198.08 points. Despite facing sell pressure and relatively low average volume and value, market players engaged in portfolio rebalancing while keeping an eye on corporate quarterly scorecards.

The market capitalization also saw a modest increase of 0.22 percent week-on-week, reaching N35.48 trillion from N35.40 trillion last week, which provided investors with N77.1 billion in gains.

Year-to-date, the All-Share Index has recorded an impressive return of 27.21 percent, reflecting the resilience of the Nigerian market amidst global uncertainties.

Experts’ analysis at Cowry Research indicates that investors have been focusing on value-oriented sector rotation, favouring blue-chip and low-cap stocks.

Last week, some companies posted surprising results, while others fell short of market expectations, leading to notable price movements.

Additionally, with the recent rate hike making fixed income instruments attractive, cautious investors are considering potential inflation hedging strategies within the equity space.

Sectoral performance was mixed, with the insurance sector leading the gainers with a remarkable 5.88 percent increase.

The consumer goods and industrial goods sectors also showed strength, gaining 2.27 percent and 0.23 percent, respectively, driven by strong sentiment in mid and high cap stocks.

However, the banking and oil & gas sectors faced challenges, declining by 2.13 percent and 0.68 percent, respectively, as investors cautiously assessed the impact of the rate hike and rising fixed income yields. Market activity remained subdued, consistent with our observations.

Average traded volumes and values saw declines during the week, with the number of weekly deals down by 9.21 percent to 37,713 deals.

The average traded volume also decreased by 9.79 percent to 2.57 billion units, and the weekly average value contracted by 32.18 percent to N21.90 billion, compared to N32.3 billion in the previous week.

Some specific stocks exhibited noteworthy performances.

Dangote Sugar Plc (+25%), GlaxoSmithkline Plc (+20%), and Linkage Assurance Plc (+20%) displayed impressive gains, drawing attention from investors.

Conversely, Eterna Plc (-27%), UPL (-18%), and Guinness Nigeria Plc (-17%) faced declines during the week.

“For this week, we expect to see a positive outlook from the local bourse driven by portfolio rebalancing and opportunities to hedge against inflation. While certain sectors may face challenges, there are potential gains to be made in value-oriented sectors in the face of corporate actions and positive earnings announcements. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals,” experts said.

At the bond market, FGN bond prices fell as yields remain elevated for most maturities tracked.

In the just concluded week, the values of FGN bonds traded at the secondary market further moderated as yields increased for most maturities tracked.


Specifically, the market saw investors sell-offs at the longer end of the curve given the bearish proceedings in the money market.

Particularly, the 15-year, 12.50 percent FGN MAR 2035 and the 30-year, 12.98 percent FGN MAR 2050 papers lost N2.42, and N0.94, respectively; their corresponding yields rose to 14.00 percent (from 13.55%), and 15.05 percent (from 14.89%), respectively.

Meanwhile, the 10-year, 16.29 percent FGN MAR 2027 bond, and the 20-year, 16.25 percent FGN APR 2037 bonds held steady at 12.54 percent and 14.60 percent, respectively.

On the international front, FGN Eurobonds also traded lower across all maturities, reflecting sustained negative sentiment. Specifically, the 10-year, 6.50 percent NOV 28, 2027, the 20-year, 7.69 percent FEB 23 2038, and the 30-year, 7.62 percent NOV 28 2047, recorded losses of USD 0.81, USD 0.28, and USD 0.76, respectively, while their corresponding yields expanded to 9.21 percent (from 8.80%), 10.84 percent (from 10.79%), and 10.87 percent (from 10.75%), respectively.