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Equities pricing: Analysts expect mixed performance this week

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By Nkiruka Nnorom

As the equities market continues to benefit from the monetary policy induced low interest rate regime, economic experts have said that activity in the market this week would be a mixed bag of profit taking and bargain hunting as investors seek to re-invest maturing Open Market Operation (OMO) bills.

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Though profit taking bucked the eight day rally that resumed at the beginning of the year on Tuesday and Wednesday, interest in heavy weights, MTN Communication Nigeria Plc and Dangote Cement Plc, which rose by 9.1 percent and 1.7 percent respectively kept the market in a positive region.

Consequently, the benchmark All Share Index, ASI, appreciated by 0.7 percent week-on-week, w/w, to settle at  29,618.52 points at the end of the week and resulted in year-to-date, y/d, return of 10.3 percent.

Also, the equities capitalisation rose by N81 billion or 0.5 percent to close at N15.256 trillion.

This aligned with development in the global space as global equities surged last week buoyed by easing trade tensions between the US and China.

U.S.  and  China had on Wednesday (January 16, 2020) signed  the  first  phase of a broader  trade pact.

Analysts at Cordros Capital, a Lagos-based investment banking firm said that while profit-taking is expected to continue this week, “We still see significant legroom for a further rally as the elevated maturities from fixed income instruments hunt for investment vehicles.”

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They, however, advised investors to pick fundamentally sound stocks.

Agreeing, analysts at United Capital Plc said that they do not rule out the possibility of profit taking in the face of the current bullish run.

Meanwhile, analysis of the sectoral performance showed a mixed performance as two of the sectors recorded price appreciation, while three declined.

The banking sector appreciated the most, rising by 2.3 percent, while the oil and gas sector advanced by 0.6 percent.

However, the industrial goods, insurance and consumer goods sectors fell by 6.3 percent, 2.6 percent and 2.1 percent respectively.

Market breath closed lower as volume and value traded declined by 22 percent and 18.3 percent to 2.09 million units and N26.47 billion respectively.

Vanguard

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