Contracting economic activities and lingering inflation have continued to fuel illiquidity in the equities sector of the Nigerian Exchange Limited (NGX) with the market closing on a downturn for the second consecutive week.
With the development, the all-share index (ASI) and market capitalisation depreciated by 1.08 per cent to close the week at 51,355.74 and N27.963 trillion respectively.
Despite closing marginally higher on three out of the four trading sessions last week, all other indices finished lower except NGX Main Board, NGX Pension, NGX Insurance, NGX AFR Div. Yield, NGX MERI Growth and NGX Consumer Goods, which appreciated by 0.73 per cent, 1.44 per cent, 1.41 per cent, 0.80 per cent, 4.37 per cent and 0.17 per cent respectively while the NGX ASeM, NGX Growth and NGX Sovereign Bond indices closed flat.
Sectoral performance was largely bearish, following declines in the Banking (-2.5 per cent), Oil and Gas (-1.4 per cent), and Industrial Goods (-0.2 per cent) indices and gains in the Insurance (+1.4 per cent) and Consumer Goods (+0.2 per cent) indices.
Besides, the conglomerate industry outweighed banks, contributing 77.81 per cent to the total equity turnover volume
The market opened for four trading days, last week, as the Federal Government declared Friday as public holidays to mark Eid el-Fitr.
The downward slide was primarily due to sell pressures on MTNN (-6.7 per cent), with the month-to-date (MTD) and year-to-date (YTD) returns settling at -5.3 per cent and +0.2 per cent, respectively.
Although analysts predicted a brighter outlook, stating that with the pending 2022 full-year financials being released to the market alongside first quarter numbers, as well as the gradual return of liquidity due to dividend payments.
However, they maintained that the rebound could be sustained if the selling sentiment among the highest-priced stocks moderates and liquidity in the market improves further on dividend payment as more and more companies hold their yearly meetings for shareholders to approve the payment.
Codros said: “In the coming week, we expect the NGX’s floor to be flooded with results as the Q1-23 earnings season commences in full swing. Thus, we expect decent earnings releases across the board to temper selling activities and support positive sentiments on the bourse.
“In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income space.
“Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”
Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, said: “We expect mixed trading sentiments to continue as bargain hunting and positioning hit the market on low new attractive price levels, ahead of more Q1 earnings expectations.
“We note that income investors would continue to target dividend-paying and defensive stocks to protect their portfolios post-dividend adjustments. Any pullback at this point may add more strength to upside potentials.”
He urged investors to leverage prevailing low prices of stocks to increase their portfolio on dividend-paying stocks, looking at the trends and events across the globe and domestically.
Vetiva Dealings and Brokerage said: “Market recovered today, as investors take position ahead of Q1 results, while also reacting positively to Accesscorp corporate disclosure. We expect today’s positive session to filter into the next trading session.”
Further breakdown of last week’s trading showed that a turnover of 3.9 billion shares worth N15.6 billion was recorded in 16,856 deals by investors on the floor of the exchange.
This volume of shares traded is however higher than 2.8 billion units worth N10.9 billion that was exchanged in 15,686 deals on April 14, 2023.
The conglomerates industry (measured by volume) led the activity chart with 3 billion shares valued at N5.9 billion traded in 1,379 deals; thus contributing 77.81 per cent to the total equity turnover.
The financial services industry followed with 707 million shares worth N6.2 billion in 8,430 deals. The third place was the consumer goods industry, with a turnover of 43.155 million shares worth N1.026 billion in 2,223 deals.
Trading in the top three equities namely Transnational Corporation Plc, Access Holdings Plc and Fidelity Bank Plc (measured by volume) accounted for 3.302 billion shares worth N7.999 billion in 2,375 deals, contributing 84.23 per cent to the total equity turnover.
A total of 590 units of exchange-traded products (ETPs) valued at N269, 819.25 were traded in 32 deals compared with a total of 525 units valued at N591, 412.35 transacted last week in 28 deals
Also, a total of 29,696 units valued at N29.004 million were traded in 28 deals compared with a total of 5,200 units valued at N5.115 million transacted last week in 18 deals.
