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Equities pricing: Analysts differ on market direction

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As investors lose N310.4bn

By Nkiruka Nnorom

AS the equities market continues to tumble, investment analysts have expressed differing opinion on the outlook for the market.

This comes as investors lost N301.4 billion last week in the wake of the bear run that has been pervading the market.

While some of the analysts expect a reversal of the negative trend owing to expected quarter 1, Q1’19, earning releases, others maintained that the market would remain in the red zone due to lack of a positive trigger to move it out of the negative region.

According to analysts at Cowry Asset Management, a Lagos-based investment banking firm, the equities market may close in positive territory as the early-birds companies release their Q1’2019 financial results, which is expected to be fairly positive. “Hence, we feel investors would take advantage of the low share prices to raise the local bourse upwards,” they said.

However, analysts at Cordros Capital, said: “In the absence of a positive catalyst, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuation remain supportive of recovery in the mid-to-long”

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Agreeing with them, Afrinvest Securities, in a report said: “We expect to see profit-taking activities in some bellwether stocks, which would pressure market return for the week.”

Meanwhile, the major benchmark index – the All Share index, ASI, fell by 0.2 percent at the close of transactions last week to close at 29,565.95 points, with the year-to-date, YtD, return paring further to -5.9 percent, while market capitalisation declined by N301.4 billion to settle at N11.1 trillion.

Performance across sectors was largely bearish as four of five indices trended southward during the week. The oil & gas sector emerged the lone gainer, up 0.3 percent due to investors positioning in Mobil Oil Nigeria Plc (+4.6%) and Eterna Plc (+2.5%).

On the flip side, the insurance sector declined by 3.1 percent as sell-offs in NEM Insurance (-13.7%) and Axa Mansard Insurance (-5.0%) weighed on the index. The industrial and consumer goods sectors followed suit, shedding 0.5 percent and 0.4 percent respectively on the back of price declines in Cutix plc (-10.6%), First Aluminium Plc (-3.0%), Nascon Allied Industries Plc (-4.7%) and Guinness Nigeria Plc (-3.9%). Similarly, the banking sector declined marginally by 0.3 percent on losses in Ecobank Transnational Incorporated (-7.8%), Union Bank of Nigeria (-7.1%) and FCMB Group (-2.7%).

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