The reality that Coronavirus (COVID-19) is far from over remains a threat to sustaining Nigeria’s equity market rally in this new week.
As a result, activities of profit takers seen the preceding trading day may continue today being the first trading day of the new week.
Amid gradual easing of the lockdown, measures earlier enforced to curb the virus spread had triggered a prolonged economic slowdown.
Before now, some speculative investors had looked past this threat as they focused on increasing their bets in value counters for possible capital appreciation.
Many businesses have suffered severe losses due to the COVID-19 induced lockdown and have had to decide on laying off staff. Businesses – aviation, hotels, private schools, restaurants are finding it difficult to continue making loan repayments to banks.
“In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions”, said analysts at Lagos-based Cordros.
They continued to advise investors to trade cautiously this week “and seek trading opportunities in only fundamentally justified stocks.”
Equity research analysts at Lagos-based Vetiva Securities expect some level of jittery and negative reaction at the start of this week’s trading, barring any positive event that is capable of uplifting sentiment”.
Vetiva analysts outlook for this week follows speculations around the possible impact of the second wave of the Coronavirus (COVID-19) hitting countries around the world, as well as the declines in prices of crude oil due to weak demand.
Oil was little changed on Friday June 12 and logged a first weekly decline since April as new U.S. coronavirus cases spiked, stoking fears of a second wave of the virus hitting fuel demand.
Brent settled at $38.73 a barrel, up 18 cents, while West Texas Intermediate settled at $36.26 a barrel, down 8 cents.
Both benchmarks logged weekly declines of about 8percent, their first after six weeks of gains that have lifted prices off April lows.
In the holiday-shortened week ended Thursday June 11, the Nigerian equities market posted a positive week-on-week (WoW) performance courtesy of bargain hunting in a number of large cap stocks at the start of the review week.
This followed investors interest across banking stocks and large cap stocks like MTNN Plc and BUA Cement Plc.
The NSE All-Share Index and Market Capitalisation both appreciated by 0.67percent to close the review week at 25,182.67 points and N13.137 trillion respectively.
Thirty-four (34) equities appreciated in price during the review week, higher than 26 equities
in the preceding week.
Thirty-one (31) equities depreciated in price, lower than 39 equities in the preceding week, while 98 equities remained unchanged, same as
98 equities recorded in the preceding week.
Nigeria like other global stocks tumbled on Thursday on fears a rise in new coronavirus cases could hurt a rush to open economies.
All other indices finished higher with the exception of NSE MERI Growth, NSE Consumer Goods and NSE Oil/Gas Indices which depreciated by 0.07percent, 0.20percent and 2.62percent respectively, while NSE
ASeM closed flat.
The Month-to-Date and Year-to-Date losses moderated to -0.3 percent and -6.2 percent, respectively.
