The record negative start to trading on the Nigerian Exchange Limited (NGX) this week does not mean there are major downsides triggers that are capable of spurring sell off in the nation’s capital market. Currently, investors are eagerly awaiting the release of third-quarter (Q3) financial scorecards of listed corporates on the Bourse.
While Lagos-based analysts at Meristem Research do not rule out profit taking on counters that have seen significant share price appreciation lately, they maintain that the overriding sentiment will be positive.
Over N328billion gained last week ushers in profit takers
The announcement of Champion Breweries tender offer by its majority shareholders spurred buy interest on the stock market last week. Though, the market opened this week on a negative note signaling that investors began to take profit from gain of about N328billion recorded in the trading week ended Friday, October 15.
“We expect the market to close on a positive note this week. Although prices have moved from very attractive levels in the previous weeks, we do not see clear downside triggers to spur mass sell offs. Thus, we expect the positive mood to continue,” said Lagos-based Meristem research analysts in their October 18 note to investors.
“We expect a sustained bullish performance as positive sentiment continues to build up in anticipation of more third-quarter (Q3) earnings releases,” according to Afrinvest Research analysts in their Monday October 18 note.
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Also, research analysts at GTI Securities said they expect bullish sentiment “as investors continue to take position in different stocks, as market anticipates the release of 9-month earnings report. Furthermore, investors will also track yield movement in the fixed income market.”
Likewise, market analysts at Lagos-based United Capital in their recent investment views said, “Going forward, we expect the recent rally to be sustained as market participants anticipate a strong Q3-2021 earnings season”.
“We expect the All Share Index (ASI) to inch up further this week amid positive market sentiment”, Vetiva analysts had said in their breakfast note on October 18. Meanwhile, following a negative start to this week, due to investors profit taking activities in consumer goods and insurance space, the analysts noted that they expect market to trade mixed with the possibility of reversing record losses.
While market participants expect the early bird listed companies to start releasing their third-quarter (Q3) financials to the investing public, it is worthy to note that the record higher oil prices and resilient corporate result could further bolster market liquidity.
“The expected Q3 2021 corporate earnings will be responsive to macroeconomic vulnerabilities,” according to Financial Derivatives Company in their October 6 presentation at the Lagos Business School (LBS) executive breakfast session.
They expect economic growth to slow relative to Q2 2021 due to base year effect. Financial Derivatives analysts further said in their outlook for October/November that the stock market rally will fizzle in November after a brief correction.
Stock market in review
In the broader market, investors bought fundamentally sound names which helped push the index up by 1.39percent last week. The record gains in the review trading week had driven the market’s positive return year-to-date (YtD) to +2.90percent. The review week’s activity was enhanced by demand for stocks in banking stocks, particularly that of FBN Holdings.
The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation had appreciated from preceding week-open highs of 40,868.36 points and N21.296trillion respectively to 41,438.15 points and N21.624trillion.
The milestone listing of NGX stocks
The NGX Group listed its shares last week by introduction in the Financial Services and Capital Market Infrastructure sector of the Nigerian Exchange Limited (NGX), with the ticker “NGXGROUP”. A total of 1,964,115,918 shares were admitted to trading, representing the issued share capital of the Group. After the listing by introduction, investors last Friday in 31 deals exchanged 3,562,076 units of the newly listed stock. INVESTOR trend watch shows that these listed shares of the NGX Group have continued to record bargains as more investors continue to buy.
Stakeholders speak
The listing of NGX Group on NGX is another milestone attained pursuant to the Group’s 2018 – 2021 corporate strategy, said Abimbola Ogunbanjo, the Group Chairman, Nigerian Exchange Group Plc.
He added: “Our shareholder base has more than doubled since our demutualisation in March 2021 and our valued shareholders will benefit from the enhanced liquidity that listing on The Exchange will facilitate. This listing will also enable a much wider universe of potential investors and market participants to share in our growth journey. As a Board, we embrace the letter and spirit of the listing requirements and we are committed to transparent disclosure, proactive stakeholder engagement and exemplary corporate governance.”
Also speaking, Oscar N. Onyema, Group Managing Director/Chief Executive Officer, NGX Group said the listing of NGX Group on the nation’s premier Exchange, NGX, will enable institutional investors globally as well as the Nigerian public to invest in Nigerian Exchange Group Plc.
“With strengthening market dynamics, serving the largest economy in Africa, NGX Group’s listing allows us to expand in key capital market infrastructure verticals and look beyond Nigeria’s borders, as we deliver on our growth plans to become Africa’s leading capital market infrastructure group,” he stated.
According to Temi Popoola, Chief Executive Officer, NGX, ““We are excited to welcome NGX Group to the main board of The Exchange and we congratulate the Board and Management first on a successful demutualisation and on its subsequent listing.”
“This move is particularly exciting, as it will position NGX Group to provide liquidity to members while stimulating the capital market ecosystem to grow at the same pace as the economy. Today, we reiterate our commitment to being a trusted partner to NGX Group and other listed companies as we continue to build a platform that allows our listed companies, investors and other stakeholders to maximise value in our market,” Popoola said.
