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Operators predict rebound in stocks, amidst positive earnings expectation

By Nkiruka Nnorom

DESPITE the slow down in activities in the equities market that saw investors losing N506 billion last week, capital market operators have indicated that the market will take a positive turn this week.

Their assumption is premised on the improving macro-economic figures churned out in the last two weeks.

Nigerian Stock Exchange

The latest figure on inflation showed a consistent deceleration for 12 consecutive months with the number falling to 14.33 percent at the end of February 2018 from 15.13 percent in January. Also GDP figure showed that the economy expended by 1.92 percent year-on-year (YoY) in the fourth quarter of 2017 (Q4’17), thereby maintaining its positive growth since the re-emergence of the economy from recession in the second quarter of 2017 (Q2’17), while February Purchasing Managers Index (PMI) report for manufacturing and non-manufacturing activities, sustained expansion during the month, at 56.3 points and 56.1 points respectively.

Reacting, Mr. David Adonri, Managing Director/CEO, Highcap Securities Limited, said: “The outlook is positive; the companies have started releasing their results and results so far are impressive and the distribution also are impressive. So, we are entering a season that would be driven by the performance of the companies as they release their results. We will see a reversal in tempo next week as companies continue to release their results.”

Also analysts at Cordros Capital stated: “Despite the loss recorded during the week, we reiterate our positive outlook for the equities market, as strengthening macroeconomic fundamentals suggest legroom for gains still exist.”

“With sell pressure persisting at session close, we believe weak sentiment will filter into trading at week open. However, we note that renewed interest in beaten down stock prices in addition to more positive earnings releases could improve market sentiment,” analysts at Vetiva capital said.

Analysis of transaction last week showed that the equities market halted two consecutive weeks of gains, with the All Share Index, ASI, plunging by 2.85 percent to settle at 41,935.90 points from 43,167.86 points.

Similarly, the equities market capitalisation, declined by 3.26 percent to N15.002 trillion from N15.508 trillion, resulting in N506 billion losses to investors.

The banking sector posted the highest losses at 9.79 percent following losses in Zenith Bank Plc and Guaranty Trust Bank, despite broadly positive corporate releases during the week.

The oil and gas followed, falling by 1.64 percent, while the consumer goods and industrial goods sectors were down 1.59 percent and 0.24 percent respectively. On the flip side, the Insurance sector rose marginally by 0.25 percent.


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