Yuletide season: Analysts differ on equities performance forecast

As market operators savour 43% YtD

Stories by Peter Egwuatu

FINANCIAL analysts have expressed divergent positions in their forecasts on equities market performance this week on the Nigerian Stock Exchange, NSE.

Some of them stated that the market will experience bearish run as the Yuletide approaches, while others forecast that the market will remain bullish, at least this week.

Nigerian Stock Exchange

Reacting to the performance of equities market last week, analysts at Vetiva Capital Management, said:   “Notwithstanding the green close today (last Friday), market sentiment remains tepid– indicated by negative market breadth as well as notable losses across several stocks. Consequently, we foresee further bearish trading at week open.”

But analysts at Afrinvest Research stated: “Following a largely negative performance last   week, we expect the market to rebound in the coming week,(this week)   as investor’s position in fundamentally sound stocks ahead of the usual year-end rally.”

The market performance last week showed that the Nigerian equities market was largely bearish as the All Share Index (ASI) depreciated 2.1% week-on-week, W-o-W, to settle at 38,436.08 points while Year-to-Date, YtD, return contracted to 43.0%. Notwithstanding, market capitalization increased by N6.0billion to N13.7trillion and NSE index dropped by 2.09% to close 38,436.08 points.

Activity level was mixed as average volume fell 44.2% to 425.3milion units while value traded rose 41.3% to N10.3billion.

The week’s top traded stock by volume were First Bank Nigeria Holding FBNH (184.2milion ), Diamond Bank (147.3milion) and Zenith Bank   (117.2million) while Dangote Cement (N23.9billion), Nigerian Breweries   (N3.2billion), and Zenith Bank (N3.0billion) were the top traded by value.

Operators savour 43% YtD

Meanwhile, capital market operators have expressed excitement with the YtD return on investments recorded at the Nigerian stock market, which stood at 43 per cent last weekend, describing it as quite impressive.

While reacting to the performance of the market for the year, Managing Director of APT Securities & Funds Limited, Mallam Kasimu Kurfi, said: “It is quite impressive for the kind of returns we see in the market this year. For the market to gain 43 per cent year to date is good. It shows that foreign investors are gradually returning to the market. Imagine, the market gaining 45% in six month only June to date. This was not achieved in the last eight years. The Banking sector have achieved over 70% in the same period while many banking stocks gain over 100% such as Diamond Bank, Access, Zenith, GTB and others gained from 150% to 250% such as Fidelity, UBA, FBHN, StanbicIBTC.

“The major challenge of the market is monetary policy by CBN. The market did not respond until when the CBN introduced Export – Import, Foreign Exchange, FX policy which restored back confidence of foreign Investors. It shows clearly the influence of foreign Investors in our market. The major issues now to restore the confidence of local Investors who will help to sustain the stability of the market as it was before the coming of foreign Investors.”

In the same manner, Managing Director of High Cap Securities Limited, Mr. David Adonri said: “ The market has done well   given the fact that the country had been in recession before June and in almost six months later , the market has gained 43 per cent Ytd. The FX was a major problem in our market, but with the introduction of Export Import FX Window introduced by the Central Bank of Nigeria, CBN, we saw foreign investors showing more interest which led to the rally we have seen in the last six months. Though, we have not seen full stability in the FX yet, but there is a bit relief for manufacturers.”

In his reaction, the Managing Director of Solid Rock Securities Limited, Mr. Patrick Ezeagu, said: “ We are happy that our market is bouncing back,   recording 43 per cent gain is a big achievement. It is the foreign investors’ interest that has pushed the market upward. We still need to make the market attractive to retail investors who are the backbone of our market. Government has a role to play here to improve the economic wellbeing of the people as well as make viable economic policies that will improve income for people to save and invest in the economy.”

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