Nigeria’s equities market has failed to show better performance lately, despite earlier projections by many market watchers that influx of positive corporate earnings and accompanying rewards will entice stock buyers.
Though the market had advanced by 0.82 percent at the close of trading on Friday, a lingered six-day bear run on Custom Street became a major drag on the performance of the domestic equities market. Thus, the month-to-date (MtD) and year-to-date (YtD) losses widened to 1.84 percent and -0.93 percent, respectively, as at Friday.
Despite Friday’s positive close, Vetiva Research analysts highlighted that “the sentiment in the market still remains weak”. On the back of this, they expect seesaw trading this week “as the interplay between bargain hunting and sell-offs continues”.
“Given the paucity of foreign portfolio participation in the local bourse, we anticipate that the lingering bearish sentiments would drive a negative close,” Afrinvest Research analysts had said in a March 18 note.
Analysts at Lagos-based Cordros Research reiterated their view that “the blend of a compelling valuation story, together with positive macroeconomic picture, leaves scope for a market recovery in the medium term”.
“However, we guide investors to tread the cautious trading path in the short term,” said the analysts at Cordros Research.
From a year-open high of N11.721 trillion, the value of listed stocks stood lower at N11.612 trillion on Friday, which implies that equity investors who chose to hold their stocks from beginning of the year till date lost approximately N100 billion.
Chief on this list are stock investors in Academy Press plc (-28 percent); Africa Prudential plc (-0.5 percent); Berger (-4.1 percent); BOC Gas plc (-10 percent); Cadbury (-1 percent); Champion Breweries plc (-27.1 percent); Dangote Sugar Refinery plc (-8.2 percent); ETI plc (-4.3 percent); Etranzact plc (-33.2 percent); First Aluminum plc (-16.7 percent); Flour Mills plc (-18 percent); and Forte Oil plc (-3.5 percent).
Other notable stocks that contributed to the over N100 billion lost this year from the market include GlaxoSmithKline Consumer plc (-25.5 percent); Guinness Nigeria plc (-11.1 percent); Honeywell Flourmills (-6.3 percent); International Breweries plc (-14.8 percent); May & Baker plc (-2 percent); Mobil Oil plc (-8.4 percent); MRS (-18.9 percent); and NAHCO (-6.8 percent).
Considering the overly bearish theme that has dictated the pace of the market recently, it may likely see a rebound in the trading week to March 29 as investors take advantage of badly-beaten stocks on the Exchange.
“We expect the equities market to record a stronger performance in March. The following factors should drive performance of the equities market: release of corporate earnings and actions; temporary drop in the yields on the fixed income securities, political stability; stability in the foreign exchange (FX) market,” said FSDH research analysts in their March financial market outlook.
“The performance of the equities market in the last six years shows that the market usually appreciated between February and March, except in 2014 and 2018. The equities market may appreciate in March after peaceful elections,” the research analysts added.
FSDH analysts had asked investors to position in stocks that have good fundamentals that are currently trading below their fair value and take position in stocks that have a history of good dividend payment, noting that they see opportunities in the banking, consumer goods, building materials and oil and gas sectors of the market.
However, these earlier projections by the analysts have yet to come true as the market is down by 1.84 percent month to date and the value of many listed stocks has stood lower.
Further checks on the year-to-date decliners list show Nigerian Breweries (-18.7 percent); Neimeth (-20.5 percent); NEM Insurance (-13.3 percent); Northern Nigeria Flourmills (-10.4 percent); PZ Cussons (-13.2 percent); Resort Savings (-60 percent); Seplat (-14.1 percent); Stanbic IBTC (-5.1 percent); Total (-3.4 percent); Transcorp Hotel plc (-11.5 percent); Transcorp (-3.8 percent); UAC of Nigeria plc (-17.9 percent); UAC Property Development Company (-11 percent); Unity Bank plc (-24.3 percent); University Press (-15.1 percent), Vitafoam (-9.8 percent), and Zenith Bank plc (-4.3 percent).
Iheanyi Nwachukwu
