NGX halts seven-week gains on waning sentiments, negative price movement



Uba Group

After the positive close of 2022 in the spirit of a Santa Claus rally, the Lagos bourse opened for trading in 2023 on Tuesday with a positive close.

However, it closed the week southward to halt the seven consecutive weeks of bullish transition occasioned by the pullback experienced mid-week due to sell-offs and profit-taking in some of the mid-large cap stocks.

Stock analysts at Cowry Asset Management Limited said it is likely that the positive rally may linger for a long-time as listed companies continue notifying the exchange of their closed periods and planned board meetings.

At the close of the week, the benchmark index declined by a marginal 6 basis points week on week to 51,222.34 points and a negative index return of 0.056 percent. Similarly, the market capitalisation of listed equities dipped by N15.64 billion across four sessions this week to N27.89 trillion from N27.91 trillion in the prior week’s close.

“Notwithstanding, as the year begins to take shape, the January effect in the equities that has always been positive in the past years will likely drive the ongoing volatility for a longer period as investors are keeping an open eye on various macroeconomic data and the forthcoming MPC meeting in January as well as the churn out of the Q4 and full-year financials. Across the sectoral gauges under our coverage, the performance was largely bullish across most of the indices tracked except for the Industrial sector which trended southward (-0.58%),” Cowry Asset noted in a report.

On the contrary, the Consumer Goods index led the gainers’ chart in the review week after closing +6.44% from last week and was followed by Banking (+4.27%), Insurance (+2.68%) and Oil and Gas indices which also gained by +0.06%. Topping the chart for the week saw NAHCO (+16%), NB (+15%) and BUAFOODS (+15%) emerged as top gainers while the laggards were CHAMPION (-16%), AIRTELAFRI (-5%) and NESTLE (-2%).

Meanwhile, the level of trading activities declined as the total traded volume slumped by 50.96 percent week on week to 921.86 million and the total traded value plummeted also by 19.12 percent week on week to N15.36 billion. However, the total deals traded for the week surged by 29.63 percent week on week to 15,601 trades for the week.

“Looking ahead, we anticipate a mixed trend on profit taking and positive sentiment to pervade the market in the coming days as bargain hunting activities continue ahead of the January effects and volatility just as the market pullbacks add more strength to the upside potential of the index. However, we continue to advise investors to trade on companies’ stocks with sound fundamentals,” Cowry disclosed.

At the money market, in the just concluded week, N10 billion worth of Treasury bills matured via OMO without refinancing from the CBN. Despite the net inflow, NIBOR moved in mixed directions across the maturities tracked. Specifically, NIBOR for overnight funds and 1 month rose to 10.94 percent (from 10.00%) and 11.93 percent (from 11.50%), respectively.

In contrast, NIBOR for 3 months and 6 months tenor buckets declined to 28.68 percent (from 13.06%) and 13.19 percent (from 13.94%), respectively. Elsewhere, NITTY tanked for all maturities tracked as investors continued to demand fixed-income securities, especially treasury bills: yields on 1-month, 3-month, 6- month, and 12-month maturities moderated to 2.74% (from 2.75%), 3.23 percent (from 3.94%), 3.63 percent (from 5.69%), and 6.05% (from 8.88%), respectively.

Also in the bond market, values of FGN bonds traded at the over-the-counter (OTC) segment appreciated for most maturities tracked amid renewed demand pressure. Notably, the 10-year, 16.29 percent FGN MAR 2027 paper, and the 20-year, 16.25 percent FGN APR 2037 paper, gained N4.41, and N0.34 as their corresponding yields fell to 12.60 percent (from 13.93%), and 14.57 percent (from 14.62%), respectively.

However, the 30-year, 12.98% FGN MAR 2040 bond lost $0.99; its corresponding yield rose to 14.15 percent (from 14.00%), while the yield of the 15-year, 12.50 percent FGN MAR 2035 note remained unchanged at 13.50 percent week on week. In other news, the value of FGN Eurobonds traded on the international capital market increased across all maturities due to renewed buy interest. Specifically, the 10-year, 6.38 percent JUL 12, 2023, the 20-year, 7.69 percent paper FEB 23, 2038, and the 30- year, 7.62 percent NOV 28, 2047, all gained USD 0.44, USD 1.95, and USD 2.25, while their corresponding yields fell to 8.23 percent (from 9.06%), 12.22 percent (from 12.48%), and 11.87 percent6 (from 12.29%), respectively.