Nigeria’s equity market stretched its bearish run as the benchmark index closed lower by 1.8 per cent Week-on-Week (W-o-W) at 29,918.59 points, hitting over two-year lows as corporate earnings season opened.
Thus, while the Month-to-Date (MtD) return in the first week in May closed positive (+0.2 per cent), the Year-to-Date (YtD) loss expanded to 11.17 per cent while the market capitalisation closed the week at N13.606 trillion from N13.607 trillion posted in the previous week.
Furthermore, activity level was weak as average volume and value traded fell 1.5 and 14.9 per cent to 130.84 million units and to N2.64 billion respectively, in 2,749 deals.
The top traded stocks by volume were Courtville (205.1 million units), UBA (106 million units) and FCMB (80.9 million units) while GT Bank (N2.1 billion), Zenith Bank (N1.2 billion) and MTNN (N1.0 billion) were the top traded stocks by value.
The week started on a negative note as losses in MTNN and Nigerian Breweries dragged the All Share Index lower by 40 basis points. On Tuesday, the market moved up, reversing Monday’s loss with a gain of 1.2 per cent due to price appreciation in Dangote Cement, Nestle and Wapco.
The bearish trend persisted for the last three trading sessions as the All Share Index (ASI) closed lower at -0.8, -0.5, and -0.3 per cent on Wednesday, Thursday and Friday respectively.
Performance across sectors was poor as four of six indices recorded gains. The Consumer Goods Index led the gainers with 0.7 per cent on the back of price appreciation in UAC (+8.3 per cent). The Industrial Index trailed closely, rising 0.1 per cent following gains in WAPCO (+11.2 per cent) and CUTIX (+0.7 per cent).
On the flip side, the Insurance Index led the laggards with -0.9 per cent following sell offs in Linkage Assurance(-20.3 per cent) and Cornerstone (-9.1 per cent). The Banking Index declined by -0.7 per cent as investors exited positions in Unity Bank (-9.4 per cent) and ETI (-6.1 per cent).
The Oil & Gas and AFRI-ICT Indices lost 0.2 and 0.4 per cent respectively due to sell pressures in Forte (-10.7 per cent), Japauloil (-4.5 per cent) and MTNN (-0.8 per cent).
Traders say the bearish sentiment is down to the weak state of the economy, but assured that the market would bounce back considering that President Muhammadu Buhari has listed names for ministerial positions – a move they say could change the mind of foreign and local investors.
Buhari had submitted his list of cabinet nominees to the upper house of parliament, the Senate, on Tuesday, giving lawmakers a chance to screen them just days before they leave for a two-month break.
The submission comes almost two months after Buhari began his second term, and some five months after he was re-elected, a delay that caused jitters amongst investors and threatened growth prospects for Africa’s largest economy.
Parliament’s break is due to begin at the end of the week, although it could be delayed in order to finish the confirmation of the nominees.
Investors sentiment as measured by market breadth (advance/decline ratio) strengthened to 1.2x from 0.3x recorded last week, as 30 stocks advanced against 26 that declined. The top performing stocks were NPF Microfinance Bank (+14.2 per cent), BOCGAS (+11.7 per cent) and WAPCO (+11.2 per cent) while Linkage Assurance (-20.3 per cent), International Breweries (-18.3 per cent) and Forte Oil (-10.7 per cent) led the losers.
According to analysts at Afrinvest: “We believe that the bearish run would persist as investors maintain a risk-off approach towards investing in the domestic equities market. However, we expect that investors would resume bargain hunting due to sharp losses in some stocks recently, especially those with positive H1 2019 earnings”.
Cordros Capital in their own assessment of the weekly performance of the market said: “In our view, the sustained sell-offs in the Nigerian equities market is overdone compared to peer markets. This provides a basis for the Index to recover in the absence of further downside risks. Beyond the obvious, we believe that the blend of positive macroeconomic fundamentals and compelling valuations support our view of a near term recovery”.