Positive sentiments trail equities as new government berths

Having waited out the uncertainties around Nigerian economy, investors may see need to stage a return to the equities market as optimism trails possible impact of the new government policy statement and key appointments.

Before now, analysts had identified risk drivers of investor sentiment in Nigeria which include oil price outlook, security risks, as well as unclear direction of the economy and its impact on financial markets, among others.

Equity investors and financial market operators foresee key appointments in the federal executive council of President Muhammadu Buhari led government offering clarity on the policy direction of the Nigerian economy in the remaining quarters of the year.

Though the stock market opened this month on a negative note, not a few analysts are hopeful of possible rebound, driven by investors’ realisation that low priced stocks offer better entry point for value hunters.

This is in addition to the game changing positive atmosphere which the new government is expected to bring to the stock market.

According to market analysts at Access Bank plc, “We expect early activities by the new government to positively drive market performance.”

Last week, the NSE All-Share Index (ASI) and Market Capitalisation appreciated by 0.11% and 0.12% to close last Friday at 34,310.37 points and N11.659 trillion against last week’s open level of 34,272.09 points and N11.644 trillion respectively.

This came on the heels of a slowdown in economic activity due to a lingering fuel scarcity as a result of the face-off between petroleum marketers and the immediate past Federal Government over unpaid subsidy claims.

“We expect to see sustained bargain hunting activities, especially skewed towards beat-down value equities,” said research analysts at Lagos-based Cowry Asset Management Limited.

The stock market traded for only four days last week as the Federal Government declared Friday May 29, 2015 as public holiday to commemorate “Democracy day”.

“The sell force which was witnessed in the market up till last week’s open was reversed in further trading days, upping the All Share Index to 34.310.37 points,” said research analysts at United Capital plc.

‘The equities market still reflects weak sentiment driven by uncertainties trailing the economy and financial markets. While we expect cautious and speculative trading to guide market performance this week, we think a lucid direction of the economy and financial markets via policy statement and key appointments by the new government will be a game changer for the market”, the analysts further stated.

Market review

With the four-day period, turnover of 1.799 billion shares worth N22.105 billion in 17,337 deals were recorded by investors on the floor of the Exchange in contrast to a total of 2.943 billion shares valued at N16.045 billion that exchanged hands the preceding week in 21,306 deals.

The Financial Services Industry (measured by volume) led the activity chart with 1.546 billion shares valued at N8.895 billion traded in 10,394 deals; thus contributing 85.93% and 40.24% to the total equity turnover volume and value respectively.

The Services Industry followed with a turnover of 84.137 million shares worth N120.575 million in 497 deals; followed by the Consumer Goods Industry with 76.868 million shares worth N9.362 billion in 2,899 deals.

Trading in the top three equities– United Bank for Africa plc, West African Provincial Insurance plc and Access Bank plc (measured by volume) accounted for 904.390 million shares worth N3.345 billion in 1,705 deals, contributing 50.27% and 15.13% to the total equity turnover volume and value respectively.

Also traded last week were a total of 3,474 units of Exchange Traded Products (ETPs) valued at N1.003 million executed in 19 deals compared with a total of 25,211 units valued at N990, 777.65 exchanged the preceding week in 23 deals.

 Iheanyi Nwachukwu