Most analysts’ earlier predictions that the Nigerian stock market will further go the direction of profit-takers has been proven wrong following a positive start to trade this week. The market gained 0.20percent at the close of trading session on Monday, February 21.
This no doubt happened as stock investors continue to see need to hunt for bargains ahead of big banks full year 2021 scorecards and earlier hinted dividend declarations.
United Capital Plc which has just proposed to pay its shareholders N9billion dividend became investors delight on Monday at the Bourse, further strengthening its already positive returns to circa 22percent. Investors are buying the stock to qualify for the dividend. The proposed dividend is payable to shareholders whose names appear on the Register of Members at the close of business on March 23, 2022.
At the close of trading session on Monday, Nigerian Exchange Limited All-Share Index (ASI) increased from preceding day low of 47,140.48 points to 47,233.91 points while the value of listed stocks on the Nigerian Bourse increased from N25.406trillion to N25.456trillion, up by N50billion. In 5,961 deals, investors exchanged 421,458,180 units valued at N4.220billion. The stock market’s year-to-date (YtD) positive return increased to +10. 58percent.
United Capital led league of advancers after its share price increased from N12 to N13.20, up by N1.20 or 10percent; Africa Prudential followed after its share price rose from N6.80 to N7.45, up 65kobo or 9.56percent; while RT Briscoe increased from 60kobo to 66kobo, up 6kobo or 10percent.
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“This week, we expect to see investors continue to book profits on positions that have appreciated significantly in the past weeks. From the large-cap stocks, we expecting the profit-taking to extend to the mid-cap and small-cap outperformers,” said research analysts at United Capital.
The value of Nigeria’s listed stocks had in the trading week ended Friday, February 18, 2022, decreased by about N29billion as bargain hunters and profit takers struggled for dominance on Custom Street.
They noted in the February 21 investment views that with the big banks likely to release their full-year 2021 numbers within the next week, “we expect investors to begin to take positions in names expected to deliver outperforming numbers while declaring strong dividend payments.”
Also, Lagos-based Vetiva Research analysts had in their February 21 breakfast note to investors predicted a lukewarm start to this week’s trading, “as investors continue to digest the latest economic data while cherry-picking attractive counters.”
“We also anticipate some profit-taking activity on some of last week’s gainers,” the analysts had noted.
Last week, the National Bureau of Statistics (NBS) released the fourth-quarter (Q4) 2021 GDP report showing that the Nigerian economy grew 4percent in Q4 2021 while expanding by 3.4percent year-on-year (y/y) in full-year 2021. The economic growth was driven by the non-oil sector which expanded 4.4percent in 2021 while persistent production shortages saw the oil sector contract by 8.3percent in 2021.
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