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Expectations on banks’ report to drive equities’ performance

Stories by Nkiruka Nnorom

The anticipation of release of half year, H1, 2017 corporate earnings by Tier-1 banks will dictate the direction of the market this week even as investors continue to take position in companies that released impressive scorecards in the past weeks.

Most of the banks had last week indicated that their results would be published after an audit of the their financials.

However, the expectation that some of the banks that have obtained the permission of the Nigerian Stock Exchange, NSE, to file their results at a later date, might declare interim dividend will drive the market to a bullish region, investment analysts said.

Some of them believe that there would be a mixture of profit taking and bargain during the week.

“With trading pattern particularly positive at the tail-end of the week amidst healthy demand on several blue chips, we expect bullish sentiment to filter into the start of next week. However, we do not rule out the possibility of profit taking on stocks that have rallied significantly in recent sessions,” said analysts at Vetiva Capital Management.

According to analysts at Meristem Securities, “the market performance will be dictated by activities of banking sector stocks as investors anticipate the release of the half year results and interim dividend declaration by the Tier 1 banks”.

Meanwhile, the release of various corporate results by over 30 companies drove the market to a positive close last week though the Exchange witnessed some profit taking in the early trading sessions of the week.

Consequently, the All Share Index, ASI, advanced by 1.5 per cent during the week to settle at 37,425.56 points from 36,864.71 points, thereby bringing the year-to-date YTD, gain to 39.3 per cent. Also, investors recorded N194.0 billion gains on their investment as market capitalisation rose to N12.9 trillion from N12.71 trillion in the previous week .

Sector performance was mixed, although positively skewed, as three out of the five sectors trended upward. The consumer goods sector led sector gainers, up 4.9 per cent following price gains in Unilever Nigeria Plc and Nigerian Breweries Plc which rose by 6 per cent and 2.3 per cent respectively. The insurance sector followed, recording an upward movement of 2.8 per cent propelled by buy sentiment in NEM insurance Plc and Axamansard Plc, which rose by 5.5 per cent and 3.3 per cent respectively. In the same vein, the industrial goods sector returned 0.1% on account of upticks in Dangote and Cement Company of Northern Nigeria, CCNN, that appreciated by 2.8 per cent and 6.7 per cent respectively.

On the flip side, the oil and gas and banking sectors declined by 3.0 per cent and 1.6 per cent on account of negative return of 8.3 per cent in Mobil Oil Plc and 2.7 per cent depreciation in Guaranty Trust Bank.

A total turnover of 2.518 billion shares worth N114.117 billion in 23,546 deals were traded during the week. The financial services industry, measured by volume, led the activity chart with 1.507 billion shares valued at N16.354 billion traded in 12,511 deals; thus contributing 59.85 per cent and 14.33 per cent to the total equity turnover volume and value respectively.


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