BY FESTUS OKOROMADU
The Nigerian Stock Market experienced a lacklustre out during the week ended October 20, 2023 as the Nigerian Exchange Limited recorded a negative performance, with a notable decline in the All-Share Index by 0.42 percent week-on-week, closing at 66,915.41 points.
Market experts say the development is investor’s reaction to a combination of factors including the latest macroeconomic data release, the wait for more corporate earnings reports, which will offer insights into the upcoming Q3 GDP figures and the full year results of listed companies, with the potential for higher payouts based on their performance.
The total market capitalization of listed equities also dropped by 0.42 percent week-on week to N36.76 trillion, and the year-to date return of the All-Share Index stood at 30.56 percent.
Investors saw a total of N156.34 billion wiped out from their portfolios due to profit-taking and sectoral rotation.
Sectoral performance for the week was predominantly negative, as bearish trend prevailed in four out of five trading sessions last week, driven by profit-taking activities and selling sentiment.
The banking sector was the exception, posting a 35.2 percent gain. The Insurance, Consumer goods, Industrial Goods, and Oil & Gas sectors all recorded losses of 0.96 percent, 0.46 percent, 0.07 percent, and 0.02 percent, respectively.
Trading activity concluded on a subdued note, with the weekly deal count decreasing by 1.30 percent week-on-week to 29,298 deals.
However, the average traded volume increased by 1.80 percent, reaching 1.50 billion units, while the weekly average value dipped significantly by 26.72 percent week-on-week to N17.90 billion.
But despite the market volatility, investors showed keen interest in stocks like THOMASWY, DAARCOMM, JBERGER, UBA, and DANGSUGAR, with share prices increasing by 30 percent, 10 percent, 9 percent, 8 percent, and 5 percent, respectively, throughout the week.
On the downside, SOVRENINS, CADBURY, STANBIC, FLOURMILL, and OKOMUOIL led the week’s losers chart, with share prices declining by 18 percent, 16 percent, 13 percent, 12 percent, and 10 percent, week-on-week, respectively.
Financial analysts from Cowry Asset Management Limited say investors are waiting for a significant catalyst to boost activity, while mixed sentiments are expected to persist this new week.
“The market may see fluctuations as early filers publish their Q3 earnings reports, with a combination of bargain hunting and portfolio repositioning influencing market dynamics. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals,” they opined.
Trading in the FGN bond market during the week ended October 20, was dominated by bullish sentiment. Yields on various maturities demonstrated a downward trajectory. Notably, the 10-year, 15-year, and 20-year instruments saw their yields decline by 2 basis points (bps), 3 bps, and 5 bps, respectively.
This suggests a strong demand for these bonds, which in turn drove prices higher and pushed yields lower.
Conversely, the 30-year instrument exhibited relative stability, with yields remaining flat from the prior week. Overall, investor sentiment in the long-dated debt instruments was notably positive, resulting in closing yields of 13.23 percent, 14.93 percent, 15.36 percent, and 15.83 percent for the respective maturities.
In contrast, the Eurobond market experienced a bearish sentiment, leading to sell-offs across various maturities. This bearish sentiment resulted in an average yield increase of 77 basis points. The shift in sentiment appears to have influenced the market’s performance negatively.
Total subscriptions amounted to N383 billion, representing a bid-to-cover ratio of 1.1x, slightly below the 1.2x recorded at the previous auction. Yields moved upwards compared to the previous auction, indicating a conventional yield curve across the four available bond instruments.
The marginal rates for the 5-year (April 2029), 9-year (June 2033), 14-year (June 2038), and 29-year (June 2053) bonds closed at 14.9 percent, 15.75 percent, 15.8 percent, and 16.6 percent, respectively, marking an average increase of 33 basis points relative to the previous auction.
Similar to the September 2023 auction, investor demand was strongest for the longest tenor on offer, the 29-year June 2053 maturity, which was oversubscribed with a sales-to-offer ratio of 2.63x.
This data reflects investor sentiment and demand for government bonds in the Nigerian market.