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Corporate earnings spur equity performance to 0.9% gain in July

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Stock exchange
Nigerian Stock Exchange

•As analysts seek cautious reading amidst recovery

By Peter Egwuatu

With negative expectations already priced in, company earnings did better than expected, spurring investor interest across Cement and Tier I bank stocks and driving the equity market to gain 0.9 % in the month of July 2020.

But analysts have advised investors in the new week to continue to rejig their portfolios by buying shares of companies that post positive earnings as they expect mixed performance in companies’ first half, HI’20, results this week.

Reacting to the market performance, analysts at Cordros Capital Limited, said: “Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”

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Also reacting, analysts at Cowry Asset stated: “In this new week, we expect investors to continue to rejig their portfolios by buying shares of companies that post positive results and have sound fundamentals. Nevertheless, we advise our clients to trade cautiously as we anticipate mixed H1 2020 corporate earnings performance”

Analysts at Vetiva Research in their comment said: “We attribute the positive Week on Week, WoW performance to the significant movement recorded in the Industrial goods sector on Monday due to the better than expected earnings results posted by some companies in the sector. Upon resumption from the Eid-el-Kabir (Salah) holiday on Monday, we expect the market to continue to react to some of the earnings results that will be posted by other bellwether stocks in the coming days.”

Meanwhile, analysis of equity market last week showed that for the holiday-shortened trading week, the Nigerian Stock Exchange, NSE All-Share index rose  0.9 %  MtD to 24,693.73 points from 24,479.23 points at the beginning of July.  Las week it  closed in the green in two of three trading sessions, and reducing the Year to Date,  YtD loss to -8.0%.

On sectors, the Industrial Goods (+3.6%) index sustained previous week’s gains, with the Banking (+3.0%) index joining the leaders’ list. Conversely, the Oil & Gas (-6.5%) and Consumer Goods (-0.4%) indices closed in the red. The Insurance index was flat.

A total turnover of 421.984 million shares worth N5.337 billion in 11,801 deals were traded last week   by investors on the floor of the Exchange, in contrast to a total of 1.350 billion shares valued at N14.433 billion that exchanged hands penultimate week in 16,723 deals. The Financial Services industry (measured by volume) led the activity chart with 249.588 million shares valued at N1.563 billion traded in 5,899 deals; thus contributing 59.15% and 29.29% to the total equity turnover volume and value respectively. The Consumer Goods industry followed with 51.760 million shares worth N1.072 billion in 1,877 deals. The third place was the Industrial Goods industry, with a turnover of 46.197 million shares worth N833.473 million in 1,489 deals.

Vanguard

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