Investors in Nigeria’s equities market were caught in the web of about N604billion cumulative loss in the trading week ended Friday May 21.
The market extended its bearish run throughout the five (5) trading as more investors showed apathy towards buying shares as the yield environment still reverses higher.
“Looking ahead, we expect some short term rebound as sellers lose momentum but maintain an overall lukewarm bias towards the Nigerian equities market”, said equity research analysts at Lagos-based United Capital.
With five consecutive days of sell-side activity on Customs Street, market watchers foresee activity levels remaining tepid in new week amid lack of buy-side catalysts in the market. Though, investors are expected to see opportunities in some beaten down counters that contributed to the record loss.
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The record close in red zone in the review trading week pushed higher equities market negative return year-to-date (YtD) at -4.83percent. It was fueled by 3.81percent decline seen month-to-date (MtD).
The benchmark performance indicator of the Nigeria Bourse decreased by 2.96percent in the review trading week, while value of listed stocks on the NGX Limited decreased by N604billion.
Except Oil & Gas Index (+7.39percent), all other sectoral indices closed the week in red –Banking Index (-1.53percent), Consumer Goods Index (0.03percent), Industrial Index (-3.34percent, and Insurance Index (-0.74percent).
The Nigerian Exchange (NGX) Limited All Share Index and market capitalisation which had opened the review week at 39,481.89 points and N20.579 trillion respectively closed at 38,324.07 points and N 19.975trillion.
Stocks trading data show the market was hit by severe sell pressures as investors continued their profit taking activities across large cap counters.
Amid a bearish stock market, the Monetary Policy Committee (MPC) will meet for the third time this year on May 24 and 25.
“After carefully considering what we deem relevant to the Committee at this time, we think the final decision would be to keep all the policy parameters unchanged”, said Meristem research analysts in the May 21 note to investors.
“So far this year, the key highlight of the equities market has been the release of financial scorecards for 2020 financial year and first-quarter (Q1) 2021, with mixed performance observed across sectors. Notwithstanding, investor sentiments have remained predominantly bearish.
“Our assessment is that the gradual retracing of yields in the money market, as well as the anticipated market correction following the rally observed in fourth quarter (Q4) 2020, have played a part in the general selloffs in the equities market”, Meristem analysts noted.
They also recognize that mark-downs for 2020 financial year dividends has contributed to the negative returns on the All Share Index. “Overall, we do not think that the equities market performance would have any significant bearing on the committee’s decisions”, Meristem added.
