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Operators divided on equities outlook as downturn continues

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By Nkiruka Nnorom

OPERATORS in the capital market have expressed divergent opinion over the outlook for the equities market in the remaining days of the year.

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While some are of the opinion that the volatility seen last week would be sustained, others expect rebound given lower rates in the fixed income market.

Trading in the equities market last week was highly volatile as year-end activities ramped up with positive sentiments trailing large-cap consumer goods and banking stocks.

However, sell-off recorded in MTN Communication Nigeria Plc, which was down 2.4 percent, resulting in 0.04 percent decline in the All Share Index (ASI). Specifically, the ASI fell to 26,526.35 points from 26,536.21 points.

The market capitalisation fell by the same margin, depreciating to N12.804 trillion from N12.808 trillion and resulted in N4 billion losses to investors.

On sectoral performances, the consumer goods sector rose 1.3 percent, driven by gains in Nigerian Breweries Plc, which appreciated by 10 percent. The insurance and banking sectors edged higher at one percent and 0.8 percent respectively, buoyed by gains in Wapic Insurance and Stanbic IBTC Holdings Plc.

Conversely, selloffs in Oando shares (-6.1%) and Lafarge Africa (-1.4%) led to declines in the oil and gas and the industrial goods sectors, which were down 0.7 percent and 0.5 percent respectively.

In their projection for the week, analysts at Cowry Asset Management said: “We expect the local equities market to rebound as rates in the fixed income space, especially T-bills, have moved towards lower single digit, which would be less attractive to investors.”

In their view, analysts at Cordros Capital said the market would sustain the level of activity and volatility recorded last week over the final days of the year, with some pockets of gains expected. According to them, the pockets of gains would be made possible by portfolios re-alignment by fund and portfolio managers prior to the start of 2020.

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However, analysts at United Capital projected that interest would remain tepid as investors continue to opt for safety amid uncertainties in the macroeconomic environment. They, however, projected pockets of gains during the week.


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