A mixture of expectations is currently bedevilling the equities market following last week’s value increase that resulted from increased buy activities at the Nigerian bourse.
While some analysts say they foresee further bargain hunting this week, others are conservative in their expectations about improvement on the demand side.
In the trading week to January 23, 2015, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and market capitalisation recorded an appreciation of 2.68 percent to close at 29,812.05 points and N9.93 trillion, respectively, up from 29,034.89 points and N9.67 trillion recording the preceding trading week.
All indices finished higher during the week in review with exception of the NSE Oil and Gas index that dipped by 1.36 percent, while NSE ASeM Index closed flat.
Also, equity market analysts at Cowry Asset Management, said: “We expect to see a mix of bargain hunting and sell offs following preceding week’s rallies.”
The equities market opened this week on a negative note after shedding 0.11percent at the first trading day of the week.
Research analysts at Access Bank plc expressed optimism, saying there are possibilities that the positive recorded last week may be sustained “on the back of more bargain hunting that will outweigh selling pressure.”
“We expect the equities market to give up some of the gains of last week as currency risk remains heightened,” according to investment analysts at Lagos-based United Capital plc.
Last week, the equities market recorded bargain hunting activities, resulting to positives across sectoral indices. A turnover of 2.119 billion shares worth N 25.941 billion in 21,044 deals were traded by investors on the floor of the Exchange. This is in contrast to a total of 1.663 billion shares valued at N16.585 billion that exchanged hands the preceding week in 23,591 deals.
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The Financial Services Industry (measured by volume) led the activity chart with 1.399 billion shares valued at N8.686 billion traded in 12,352 deals; thus, contributing 66.02 percent and 33.49 percent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with a turnover of 440.331 million shares worth N9.691 billion in 1,681 deals. While the Consumer Goods Industry followed with 100.492 million shares worth N5.384 billion in 3,392 deals.
Summary of price changes shows that 35 equities appreciated in price last week, higher than 15 equities of the preceding week. Thirty-one equities depreciated in price lower than 53 equities of the preceding week, while 130 equities remained unchanged higher than 127 equities recorded in the preceding week.
Amid this feat, as local and foreign investors sell-down positions, given weak outlook on corporate earnings and broad macroeconomic variables, further positive performance of Nigerian stock market in the short term remains skeptic to some analysts.
Interestingly, it is expected that as time progresses, and as uncertainty relating to the general election and oil price decline steadily, among all other market related risk, the negative sentiments in the market will begin to subside, with volatility slowing in the second half (H2) of the year, strengthening potential for a market rebound.
Investment analysts at Lagos-based FBN Capital noted: “The NSE ASI shed 14 percent ytd through to Friday, and 13 percent in the first week of the month alone. We should view the underperformance relative to Nairobi (+2.1%) and Johannesburg (+0.1%) in the context of the oil price. Nigeria is a leading producer in OPEC; Kenya would like to join it but the collapse of the price is set to push back the development of its promising hydrocarbons finds, and South Africa is a prime beneficiary, with consumer gains from the monthly adjustments to the retail pump price.”
According to the analysts, “the fall of the index in Lagos has produced buying opportunities in both banks and non-financials, although we do not see a clear recovery until investors feel that the oil price has reached its floor. FBN Capital sees a 1 percent gain for the index over the full year.
“The NSE report on equity trading for November (2014) shows a 81/19 mix between foreign and domestic institutional transactions, compared with a ytd figure of 59/41. Not surprisingly, the foreign outflow of N116 billion in November was far greater than the inflow of N46 billion.”
Iheanyi Nwachukwu
