Investors at the Nigerian Stock Exchange (NSE) are beginning to shift their focus to the possible second-quarter (Q2) earnings which many of the companies in their portfolio could report.
As regulatory pressure is seen to be weighing on the banking counters, investors are already pricing in the possible risks on banks revenue, even as they shuffle their allocations to asset classes.
Though, the stock market recorded 7.15 percent quarter-to-date (QtD) return and 0.45 percent year-to-date (YtD) return last week, investors at the bourse have continued in their cautious approach, particularly toward raising their bets on equities.
This has also contributed to fuelling an already illiquid market thereby impacting the prices of stocks.
In about three weeks from now, the second-quarter/half year (H1) earnings season will commence at the bourse, but investment analysts are now pondering the possible outcome of most companies Q2 numbers, with most taking a clue mostly from companies first-quarter (Q1) earnings.
The recent sell pressure that bedevilled the Nigerian equities market signposts that many investors have leveraged recent gains recorded in the market to take short-term profit.
Amid this development, market analysts still believe that most equities are priced at discount, indicating a good entry point ahead of possible rebound that could be triggered by impressive H1 earnings.
Last week’s index movement of the Nigerian bourse shows that NSE All-Share Index (ASI) and market capitalisation depreciated by 0.03 percent to close at 41,517.10 points and N13.709 trillion, respectively.
Four of the NSE indices appreciated last week, with the exception of the NSE Consumer Goods Index, which was in negative 0.62 percent; NSE Lotus II -0.70 percent, and NSE Industrial Goods Index -3.22 percent.
In line with many analysts’ prediction, the stock market last week witnessed a mix of bargain-hunting activities and profit-taking, which resulted in a slightly bearish end. This was evidenced in the composition of gainers and losers.
Forty-four equities appreciated in prices during the week under review higher than 42 equities in the preceding trading week. Thirty-two equities depreciated in prices lower than 42 equities in the preceding week, while 124 equities remained unchanged, higher than 116 recorded in the preceding week.
Stock market analysts at Cowry Asset Management say they expect a continuation of the mixed performance “given potentials for realisation of short-term profits.”
Access Bank analysts link the recent sell-offs to CBN directive for banks to refund excess commission on turnover charged on customer account, as bank stocks were most hit in the bear reign.
“This week, we expect share prices to improve on positive sentiments inundating the market as companies gradually begin to appraise expected Q2 2014 performance. The outlook suggests waning sell pressure,” these analysts note.
Iheanyi Nwachukwu
