Returns at the Nigeria equities market remain negative as a result of record sell off in some counters year-to-date (ytd).
After a disappointing first-quarter (Q1), lackluster activities have continued to prevail in the domestic equities space as investor sentiments remain sloped to the cautious side.
The record negative return of -3.87percent seen in the market as at Monday April 12 was driven majorly by many counters that are still in the red, most of them have largely underperformed the market.
They are: ABC Transport (-21.1percent), Access Bank (-4.1percent), Africa Prudential (-6.4percent), Berger Paints (-11.6percent), Beta Glass (-2.5percent), BUA Cement (-6percent), Cadbury (-11.1percent), and Caverton (-4.9percent).
In their recent note, United Capital research analysts said bearish sentiments will linger. They noted that, “The first quarter (Q1) of full year 2021 proved to be somewhat soft for equity investors trading the Nigerian market. By February, sentiments soured as sell pressures began to filter into the bourse, driven by the accelerating pace of reversal in fixed income yields at primary auctions.”
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“The reversing primary market yields also triggered upward repricing of yields in the secondary market. Consequently, investors began to reduce their equity exposures, booking profits to stay at the short end of the yield curve as cash became king. The pace of selloffs remained in March but buying interest was boosted by some decent corporate actions, thus limiting the damage of the paced selloffs on Nigerian equities. Yields on fixed income instruments sustained their uptrend, weakening sentiments on risk assets like equities”, United Capital research further noted.
Other major laggards this year are Chams (-13percent), C& I Leasing (-3.8percent), Conoil (-18.2percent), Cornerstone Insurance (-5.1percent), Cutix (-2.2percent), Dangote Cement (-12.2percent), Dangote Sugar (-5.7percent), Nigerian Enamelware Company (-10percent), and ETI (-20percent).
For investors who chose to hold till date most of these stocks and others mentioned thereafter, the value they have lost this year are showcased alongside.
Also on the top underperforming list include FCMB (-15.9percent), Fidelity Bank (-1.6percent), FTN Cocoa (-34.8percent), GSK (-1.4percent), GTBank (-10.7percent), Ikeja Hotel (-8.3percent), International Breweries (-6.7percent), Jaiz Bank (-1.5percent), Axa Marsard (-11.4percent), MRS (-20.7percent), MTN N (-3.5percent), NAHCO (-11.7percent), and Nigerian Breweries (-10.5percent).
“Expectations of higher rates at the coming T-bills auction may trigger sell-offs in the bourse. Therefore, we envisage a bearish sentiment in the near term”, said Afrinvest Research in their April 12 note to investors.
In their outlook for the week ending April 16, GTI Research analysts said they expect mixed sentiment from investors “amid profit-taking from recently appreciated stocks and low valued stocks in the market”.
Investors have also lost money in Neimeth (-12.6percent), Nestle (-5.6percent), Northern Nigeria Flourmills (-11percent), Oando (-16.2percent), Okomu Oil (-1.1percent), Prestige (-8.7percent), PZ Cussons (-13.2percent), Stanbic IBTC (-1.2percent), Sterling Bank (-17.6percent), Sunu Assurance (-26.7percent), Transcorp (-12.2percent), UBA (-7percent), Union Bank (-8.4percent), Unilever (-4.3percent), University Press (-16.4percent), Wema Bank (-17.4percent), Zenith Bank (-11.3percent).
“We expect further tepid activity levels in the coming sessions leading up to the announcement of Q1 results sometime in the coming days. We anticipate another low turnover session in tomorrow’s trading amidst lukewarm investor sentiment, however we do not rule out the possibility of investors taking positions ahead of the earnings releases,” according to Vetiva research analysts in their April 12 note.
Meristem research analysts had said in their April 12 note to investors that “The sentiment in the market remains largely bearish,” adding that “the announcement of dividends and the release of corporate results did little to trigger positive sentiment in the market last week.”
“In the absence of any positive macroeconomic news or corporate action, we expect the market to tread a similar path, considering the fact that the dividend yields offered by most companies are not as attractive compared to the rates obtainable in the fixed income market. On this note, we expect the sell-offs to dominate the market activities this week”, the analysts noted.
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