By Nkiruka Nnorom
OPERATORS in the capital market have projected that the gains recorded in the equities market last week following the listing of MTN Nigeria Communications Plc will be sustained as excitement over the listing still lingers.
They also pointed to bargain hunting activity by value investors as another booster that would keep the market in the positive territory within the week.
Last week MTN Nigeria Communication Plc made good its promise by listing its entire issued and paid-up share capital on the Nigerian Stock Exchange, NSE, Thursday, thereby ending many years of waiting by investors.
Within two trading sessions, the company’s share price advanced by 20 percent to N108.90 per share from the listing price of N90, to lift the equities market marginally out of red territory.
Resultantly, the equities market, which had gone down by 1.95 percent as at Wednesday, May 15, 2019, rose 0.54 percent on Thursday following the listing of the telecommunication giant. It advanced further by 1.53 percent on Friday, resulting in 0.08 percent week-on-week (w/w) gains with the All Share Index, ASI, settling at 28,871.93 points from 28,847.81 points in the previous week. This also moderated the month-to-date and year-to-date return to -0.99 and -8.14 percent respectively.
Similarly, market capitalisation advanced by N1.88 billion or 17.29 percent to close at N12.717 trillion.
In their reaction analysts at Cowry Asset Management, a Lagos-based investment banking firm, said: “We expect the local equities market to close marginally in green territory as the euphoria of the listing of the telecoms giant is likely to be sustained. More so, we expect investors to take advantage of the general low share prices in the market, especially in the banking sector, in order to maximize their returns.”
In their own projection, analysts at Afrinvest Securities said that a combination of scrabbling for MTN shares and bargain hunting in fundamentally sound stocks would help to push the market upward.
“In the coming week, we expect to see increased investors’ appetite for the MTNN stock particularly in the early days of the week and bargain hunting in fundamentally sound stocks for short term gains. We therefore maintain a bullish outlook for the market in the near-term,” they said.
Despite MTNN lifting the NSE’s main gauge, all of the five sub-indices closed in negative territory, prompting analysts at Cordros Capital to maintain a call for caution.
They said: “Clearly, the gain was not broad-based, at such, we reiterate our cautious trading pattern. Meanwhile, we believe that the blend of positive macroeconomic fundamentals and compelling valuations still supports a near term recovery.”
However, a breakdown of the sectorial performance for trading last week showed that all the five major sector closed negative with the banking sector leading decliners. The sector declined by 4.3 percent due to losses in Guaranty Trust Bank (-4.4%) and Access Bank (-9.2%). The consumer goods sectotr trailed, shedding 4.1 percent on the back of price depreciation in Champion Breweries (-18.2%) and Nestle Nigeria Plc (5.9%). Similarly, sell offs in Regency Assurance Plc (-20.0%) and Goldlink Insurance (-13.0%) pulled the insurance sector lower, down 3.3 percent. Also, the industrial goods and oil & gas sectors declined 2.8 percent and 2.3 percent respectively as investor exited positions in Cement Company of Northern Nigeria (-9.2%), Dangote Cement (-1.7%), Forte Oil (-18.9%) and Eterna Plc (-3.8%).
However, trading activity was mixed as average volume declined 21.7 percent to 295.2 million units, while average value traded increased by 45.8 percent to N2.2 billion.