Sell-pressure in blue-chip stocks wipe N468bn from investors’ pockets as ASI sheds 1.54%



Uba Group

Sell-side pressure and volatility surfaced on the local bourse last week, with the bears tightening their grip following the news of the contagion from the failure of some US banks.

To this end, the market pulled back to trade below the 55,000 psychological levels on sell-offs in some of the highly priced stocks and some blue-chip companies even as equity investors continued to digest the recently published inflation data ahead of the forthcoming monetary policy meeting next week.

The market’s performance was lackluster in the review week as the NGX-ASI shed 1.54 percent week on week to 54,935.20 points due to profit-taking activities in some blue-chip and high-priced stocks. In the same manner, the market capitalisation nosedived by 1.54 percent week on week to N29.93 trillion as the sum of N468.12 billion was wiped from investors’ pockets, while the year-to-date return inched further to 7.19 percent from 8.87 percent last week.

Across the sectors in the week the trading week ended March 17, 2023, performance was largely bearish across the indices under the purview of stock analysts at Cowry Asset. Thus, there were declines in the Banking (-4.59%), Insurance (-2.45%), and Industrial Goods (-0.27%) sectors from the prior week.

On the contrary, the Consumer Goods index was the lone gainer by 1.39 percent this week as we saw positive price movement through the sessions while the oil and gas index remained flat from the last week’s close.

At the close of the week, the level of market trading activities was downbeat as the total number of deals decreased by 0.6 percent week on week to 18,543 even as stockbrokers recorded a 16.57 percent week on week decline in traded volumes for the week to 853.75 million units valued at N1.56 billion, indicating a decline of 92.26 percent week on week.

Meanwhile, the top -gaining securities for the week were UPL (+9%), FTNCOCOA (+8%), and BUAFOODS (+4%), while the week’s losers were UCAP (-17%), LINKASSURE (-11%), and ETI (-10%).

This week, financial analysts at Cowry Asset Management Limited, expect to see a mixed trend of market activities as players digest recent macroeconomic data and rates from the last auction ahead of the CBN MPC meeting with more earnings scorecards in the midst of price markdowns for dividends from some companies.

Also, it is expected that income investors will target dividend-paying and defensive stocks to defend their portfolios ahead of the governorship and state assembly elections. Meanwhile, 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.

Meanwhile, bearish sentiment dominated the bond market in the review week as traders sold off in anticipation of higher stop rates. Hence, the values of FGN bonds traded at the secondary market moderated as yields rose for most maturities tracked.

Specifically, the 10-year 16.29% FGN MAR 2027 and the 20-year 16.25 percent FGN APR 2037 notes fell by N0.35 and N0.29, respectively; their corresponding yields expanded to 12.45 percent (from 12.36%) and 15.40 percent (from 15.00%), respectively. However, the yield on the 15-year 12.50 percent FGN MAR 2035 and the 30-year 12.98 percent FGN MAR 2050 stayed unchanged at 14.68 percent and 15.00 percent, respectively.

Meanwhile, the value of FGN Eurobonds traded at the international capital market declined for all maturities tracked due to sustained selling pressure.

Specifically, the 10-year 6.38 percent JUL 12 2023, the 20-year 7.69 percent FEB 23 2038, and the 30-year 7.62 percent NOV 28 2047 lost USD 0.20, USD 5.63, and USD 5.49, while their corresponding yields increased to 14.41 percent (from 13.31%), 13.72 percent (from 12.51%), and 13.21 percent (from 12.11%), respectively.

In this new week, the DMO 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, 16.25 percent FGN APR 2037, and 14.80 percent FGN APR 2049 re-openings. Hence, experts expect the stop rates to rise further given the rising inflationary pressure of 21.91 percent in February.