Equities market maintains uptrend as YTD returns surpass 42%

NSE House, Lagos

The worth of investment on the Nigerian Stock Exchange (NSE) has continued on an uptrend as trading closed in a positive territory for the week ended 11th August 2017, extending gains into the 5th consecutive week, while Year-to-Date returns sit at 42.14 per cent.

The lead market indicator; NSE’s All-Share Index (ASI) appreciated further by 2.07 per cent to 38,198.60 points, from 37,425.15 points recorded last Friday, improving the Month-to-Date returns to 6.57 per cent.

Also worthy of note at the equities market last week is a four-year record high, made by the market capitalization which closed at N13.17 trillion, the highest since 2013.

A breakdown of trading activities in the week under review revealed that the equities market remained bullish, as all sessions ended on a positive note, except on Thursday, when the market fell to profit taking activities, following the bullish run previously recorded.

Further investigations revealed that the performance for the week in review was driven by investor interest in consumer and industrial goods stocks, following impressive Q2-17 earnings releases and short-lived interest in banking shares, as investors positioned ahead of interim dividend declaration by Tier 1 banks yet to release their audited H1- 17 results, except Zenith Bank that reported a double-digit growth across most income line items and declared an interim dividend of N0.25, last Thursday.

A review of sectoral performance, showed that the Consumer Goods Index, led the gainers with an appreciation of 9.71 per cent, spurred by demands for the shares of Nestle Nigeria Plc which appreciated 17.7 per cent last week.

This was followed by the Industrial Goods index that added 2.89 per cent, as investors demanded for the shares of CCNN which recorded an appreciation of 8.84 per cent in the course of the week.

On the other hand, the Insurance, Oil & Gas and Banking indices booked losses of -3.02 per cent, -2.78 per cent and -0.94 per cent respectively, as investors sold of the shares of NEM that fell by -18.52 per cent , Forte Oil that dropped -10.55per cent and FBNH that depreciated -2.09 per cent.

Guinness led the week’s 30 gainers with a growth of 27.08 per cent, against 37 losers, led by NEM that dropped 18.52 per cent.

Total volume traded decreased by 39.74 per cent to 1.52bn shares compared to 2.52bn in the preceding week while Guaranty Trust Bank, Nigerian Breweries and Nestle accounted for 56 per cent of the market volume.

Similarly, the value of trades fell by 74.70 per cent to N28.87bn compared to N114.12bn previously, while Access, Zenith and Guaranty accounted for total value traded.

Although Capital market analysts expect that there will be more profit taking activities this week, the general belief is that a rally will resurface in the banking sector, as investors position ahead of Tier1 bank’s H1-17 corporate earnings.

Last trading session (Friday), already saw banking stocks such as Guaranty, UBA, Zenith, Access and Fidelity topping trading activity on the floor of the local bourse with an exchange of 61.8mn, 50.9mn, 49.4mn, 41mn and 20.4mn units of shares respectively as investors take positions for the week ahead.

Except for Zenith Bank, which released its financials on Thursday, all of these banks and more are expected to release their earnings, which will be accompanied with interim dividend declaration.
However, the quality of earnings, released by the banks is expected to dictate market performance.

Afolabi Adesola

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