The insurance index led the gainers’ chart at the end of last week’s transactions on the equities sector of the Nigerian Exchange Limited (NGX) with 4.1 per cent, buoyed by buying interest in Sovereign Trust Insurance (+27.3 per cent) and Sunu Insurance (+17.7 per cent).
Following the sector last week was the banking index, adding 1.9 per cent. The gains were occasioned by price appreciation in GTCO (+5.4 per cent) and Zenith (+3.9 per cent).
On the other hand, the Consumer Goods and AFR-ICT index declined by 0.5 per cent and 0.3 per cent w/w respectively owing to sell pressure on International Breweries (-5.6 per cent), Champion Breweries (-4.2 per cent), MTN Nigeria (-0.6 per cent) and CWG (-4.2 per cent.
Consequently, the market closed in an upbeat, as the all-share index and market capitalisation appreciated by 0.2 per cent to close the week at 71,230.48 and N39.173 trillion respectively.
As a result, the month-to-date (MTD) and year-to-date (YTD) returns settled at +2.9 per cent and +39.0 per cent.
Overall, a turnover of 2.4 billion shares worth N22.7 billion was recorded in 33,230 deals by investors on the floor of the exchange, in contrast to a total of 2.025 billion units, valued at N27.7 billion that changed hands in 32,763 deals the previous week.
The financial services industry (measured by volume) led the activity chart with 1.72 billion shares valued at N11.6 billion traded in 14,585 deals, contributing 71 per cent to the total equity turnover volume.
The services industry followed with 185.7 million units worth N424.7 million in 2,816 deals. The third place was the ICT industry, with a turnover of 139.9 million shares worth N4.4 billion in 2,971 deals.
Trading in the top three equities namely Universal Insurance Plc, Veritas Kapital Assurance Plc, and Unity Bank Plc (measured by volume) accounted for 809.400 million shares worth N492.6 million in 2,005 deals, contributing 33.4 per cent to the total equity turnover.
Analysts predict a gloomy outlook, citing weak macroeconomic indicators as significant headwinds to corporate earnings.
Specifically, the chief executive officer of Investdata Consulting Limited, Ambrose Omordion said: “Owing to a myriad of challenges so far, however, manufacturing companies, especially, may struggle to pay dividends commensurate with their current market price.
“Traders need to watch out as the market consolidates at this level of distribution phase amidst the high volatility. The stock market remains the quickest way to hedge against the rising inflationary pressure in the system today.
“So, this pullback or correction will create another entry opportunity for discerning market players, while investors interpret the outcome of the latest TB auction to give further insights into the flow of funds in the financial market.”
Analysts at Cordros Capital said: “We anticipate cautious trading in the local stock market in the coming week due to the absence of significant positive catalysts to boost sentiments.
“Overall, we reiterate the need to position only fundamentally sound stocks as the unimpressive macro environment remains a significant headwind for corporate earnings.”
Afrinvest said: ” In the upcoming week, we anticipate cautious trading in the local bourse given the absence of significant positive catalysts to bolster sentiment.”
Meanwhile, the exchange has urged the Federal Government and the Central Bank of Nigeria (CBN) to accord priority to listed firms in accessing foreign exchange (FX) and procurement processes.
The strategic approach, according to the Chief Executive Officer of NGX, Temi Popoola, is pivotal in attracting more companies to list on the exchange and mitigating the prevalent FX challenges in the economy.
At the MTN Capital Markets Day, Popoola pointed out that NGX is excited with the new change in administration and its renewed hope agenda as it presents an opportunity to work with market stakeholders, including the regulators to address the challenges faced by the government and listed companies.
Popoola stated that the exchange was working with the government to use the capital market in tackling myriads of problems facing the economy, adding that enabling the execution of dollar-denominated transactions on NGX can address forex illiquidity.
He said: “There are companies that would like to list on our exchange, but they earn in dollars, their revenue to their bottom line is in dollars. There are also listed companies that would like to pay their dividends in dollars. However, the current regulation does not allow that.
“We are working with regulators and policymakers to try to address that because this would create a lot more benefit to the government which is looking for FX resolutions to their challenges. We believe this will also unlock the dollars that people have saved in domiciliary accounts to be put into useful work in the capital market and economy.”
