BY BAMIDELE FAMOOFO
After closing the month of May positive for the fourth consecutive year to defy the “sell in May and come back in October” mantra among stockbrokers, upbeat momentum ruled trading activities in the local bourse last week to kick start the new trading month on the back of market expectations for further policy guideline and direction from the new administration after the successful transition of power to President Bola Tinubu.
Consequently, the benchmark index advanced 5.37 percent week on week to 55,820.50 points after breaking out the strong resistance levels of 53,000 points and 55,800 points to trade above its 50-Day Simple Moving Average and 100DMA after the golden cross on the daily and weekly charts.
In the same vein, the market capitalisation of listed equities inched further by 5.37 percent w/w to N30.39 trillion on the back of higher dividend payouts and relatively improved liquidity as fixed incomes yields were not stable in the face of heightening inflation which supported buying interests in the market and flow of funds into the equity space.
Resultantly, investors saw profit of N1.55 trillion in 4 out of 5 sessions while the market year-to-date return rose to 8.92 percent.
Also, the performance index across sectors was green and can be attributed to price appreciation after adjustment for dividend and position taken by insiders or majority shareholders.
To this, the Oil & Gas sector led the gains by +10.48% w/w and followed by Consumer goods sector (+8.52%) Industrial goods (+5.83%), while the Banking (+4.89%) and Insurance (+1.21%) also closed northward this week.
Meanwhile, investors’ sentiment was upbeat in momentum as the level of trading activities last week stayed positive with a 13.93 percent w/w increase in total weekly deals to 35,122.
Also, the average traded volume last week trended in the positive territory by 31.70 percent to 2.59 billion units while the average weekly value moved northward by 37.59 percent w/w to N46.64 billion.
At the end of the week, CONOIL (+48%), ETERNA (+32%) and MRS (+21%) were the leading gainers for the week while NPFMC RFBK (-9%), CHAMPION (-7%) and WAPIC (-6%) led the laggards’ chart for the week.
In the next session, investors expect a mixed trend of activity in the midst of profit taking and cautious trading as portfolio reshuffling persists even as the market expects more policy guidelines from the new government.
However, stock market analysts at Cowry Asset continue to advise investors to target fundamentally sound companies and defensive stocks to protect their portfolios post-dividend adjustments.
They said any pullback at this point may add more strength to upside potentials.
In the just completed week, the value of FGN bonds moved in varied directions in the secondary market, prompting investors to selectively choose maturities with attractive yields.
The borrowing costs for the 10-year, 16.29 percent FGN MAR 2027, and the 15-year, 12.50 percent FGN MAR 2035 bonds remained unchanged at 12.53 percent and 14.81 percent, respectively, as traders adopted a cautious stance.
Conversely, the longer end of the yield curve experienced bullish activity following the release of a revised bond calendar for Q2 2023 by the Debt Management Office (DMO).
Notably, the previously offered bonds (28s, 32s, 42s, and 50s) were replaced by the 29s, 33s, 42s, and 53s. In particular, the 30 -year, 12.98 percent FGN MAR 2050 paper bonds (the 50s bond that was replaced) gained N0.42, while yielding 15.58 percent (from 15.66%). Similarly, the 20- year, 16.25 percent FGN APR 2037 bond appreciated by N0.87, accompanied by a decline in its corresponding yield to 15.43% (from 15.58%).
Furthermore, FGN Eurobonds traded on the international capital market witnessed appreciation across all maturities, driven by President Tinubu’s commitment to removing fuel subsidies and unifying the multiple exchange rates.
Specifically, the 10-year, 6.375% JUL 12 2023, the 20-year, 7.69 percent FEB 23 2038, and the 30-year, 7.62 percent NOV 28 2047 recorded gains of USD 0.16, USD 3.41, and USD 3.29, respectively, while their corresponding yields contracted to 12.55 percent (from 13.06%), 11.94 percent (from 12.61%), and 11.67% (from 12.27%), respectively.
Analysts note that traders’ sentiment will be influenced by the T-bills auction result in the course of the new week.
Cowry Research anticipates a moderation in the 364-day T-bill rate, leading to an increase in local OTC (over-the-counter) bond prices and a decrease in yields this week.
