The Nigerian stock market seems to stand far from a near term rebound chiefly due to the absence of policy pronouncements that are capable of eliciting investors buy decision on Custom Street.
Equities trading commenced this week on a sluggish note as the market’s performance indicator moved further into the negative region. Neither the decision of the Monetary Policy Committee (MPC) nor developments in the global space impacted positively on investors’ sentiment towards Nigerian equities. Till date, stock investors are caught in the web of negative return of approximately -12percent this year.
Notwithstanding the negative outlook that still trails the market, it is worthy to note that most value counters currently priced low still offer attractive entry points for investors eyeing capital appreciation and dividend yields.
Analysts still pessimistic in their outlook
In its September outlook for equities, analysts at Financial Derivatives Company (FDC) simply said: “Stock market will dip again”. While noting that the market will witness sustained weak investor sentiment, FDC sees investors still preferring stocks with strong fundamentals and competitive dividend yields.
“We expect the market to remain pressured given global risk-off sentiments and weak domestic participation. Nonetheless, we note that valuations remain attractive while price deterioration has resulted in expected dividend yields on some stocks rising significantly to levels on par with yields on Treasury bills. Hence, we advise that long-term investors consider appropriately timed investments,” Cordros Research analysts said in their September 20 note to investors.
“This week, the bearish sentiment in the market is expected to continue as there are no major catalysts to boost investor confidence, although we note that there is room for bargain hunting,” Afrinvest Research analysts in their September 23 note.
While making reference to the market’s negative start this week, Fbnquest analysts in their September 23 note linked it to cautious sentiment towards risky asset underpinned by absence of positive market catalyst. “We expect the market to maintain this trading pattern in the next session”, they added.
“The Nigerian equities market has been on a bearish trend for the past 18 months. The market has been plagued by several factors including; uncertainties that surrounded the 2019 elections; lower than anticipated economic growth, fiscal challenges, insecurity concerns in some part of the country and disappointing results from most non-financial companies”, said FSDH Research analysts in their recent report.
“Nevertheless, the market has witnessed a recent rally with investors seemingly interested in acquiring Nigerian banking stocks as many of the top banks are able to post decent earnings growth despite the challenging operating environment,” FSDH Research stated.
Market in review
In the trading week ended Friday, September 20, the cumulative value of listed equities on the Nigerian Stock Exchange (NSE) depleted by about N40billion.
All sectoral indexes closed in the green zone. The positives seen across the sectoral index is an indication of waning sell pressure that hitherto pervaded the Nigerian bourse.
Stock market which had opened the trading week in review with All Share Index (ASI) of 27,779 points and capitalisation of N13.523trillion closed the week at 27,698.69 points and N13.483trillion respectively.
Week-on-week (WOW), the NSE ASI decreased by 0.29percent while its year-to-date (YTD) return stood at -11.87percent. Month-to-date (MTD) the stock market is down by 0.63percent.
NSE 30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity stood at 1,131.21 points representing week-on-week increase by 2.62percent and month- to- date increased by 4percent.
NSE Banking Index at 344.35 points shows a weekly increase of 1.84percent and 7.21percent increase in this month. NSE Consumer Goods Index advanced by 2.21percent in the review trading week and 1.41percent this month to 533.52points.
NSE Industrial Goods Index has at 1,093.55points rose by 0.04percent in one week while MTD it increased by 0.22percent; NSE Insurance Index closed the review week at 110.56points representing an increase of 4.85percent and 3.47percent MTD.
NSE Oil & Gas Index at 213.67points as at the week ended Friday, September 20 indicates 0.48percent increase and 7.69percent rise this month; while NSE Pension Index at 989.72 points on Friday rose by 2.57percent WTD and 6.92percent MTD.
