Global concerns over Brexit, combined with speculative profit-booking will continue to drive the local bourse lower. As investor sentiment at the Nigerian bourse remains low, the market looks good to witness further decline in volume and value of trade.
Though before now, many market watchers foresaw a tepid trading session when market resumes after the public holiday in celebration of the Eid-el- Fitri Muslim Festival.
The Nigerian Stock Exchange began the week on negative footing, as bearish sentiment across all key sectors drove the NSE ASI further lower. Domestic equities came under selling pressure as risk sentiment persists.
While industrial and banking stocks were at the forefront of Monday’s sell-off, investors routed to offload Skye Bank shares as CBN sacked top executives of the bank over capital adequacy issues and huge non-performing loan portfolio.
Meanwhile, given the relatively low closing prices of some fundamentally justified counters, other schools of thought within the market anticipate that trading activities might be upbeat as it ushers in bargain hunting activities by investors.
“We expect the current bearish sentiment in the equities market to be sustained this week as the euphoria around the liberalized FX market wanes. For a short trading week, we expect marginal movement in the benchmark index, likely tilted to the downside”, said research analysts at Lagos-based United Capital plc.
“We are of the view that the ability of listed companies to maximize revenues to boost their bottom lines at a period of slow economic growth appears to be presenting dark cloud for the market, which may prompt some investors to avoid risk, hence, the equity market may continue in the bear’s territory this week”, according to research analysts at Dunn Loren Merrifield.
In the trading week to July 1, 2016, twenty-two (22) equities appreciated in price, lower than forty (40) equities in the preceding trading week; while fifty-two (52) equities depreciated in price, higher than thirty-two (32) equities in the preceding trading week. Also, 106 equities remained unchanged, lower than 108 equities recorded in the preceding trading week.
The NSE All-Share Index (ASI) which opened last week at 30,649.66 points closed at 29,305.40 points, while the market capitalisation declined by N463billion, from N10.527trillion N10.064trillion.
“The Nigerian bourse traded largely bearish this past week (recording four days of losses) as investors continued to weigh the fall out of Britain’s decision to leave the European Union (EU). The NSE ASI declined 439bps w/w to put year to date return at 2.32%. With Q2 earnings season drawing nearer, we do not rule out the possibility of investor positioning ahead of these releases”, Vetiva Capital analysts said in their breakfast report –‘the week ahead’.
Iheanyi Nwachukwu
