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Equities market up 0.3% amidst portfolio adjustments, positioning for Q3’20 earnings

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Nigerian Stock Exchange

By Peter Egwuatu

As the stock market and economy continued to move in opposite directions, investors seem to be repositioning their portfolios on the back of the low price attractions leading to upward trend in the market last week.

But some investment analysts see a reversal of price gains as some investors may go for profit taking sales during the week, though positive sentiments appear to be sustained on tier-1 banks despite the continued delays in release of their first half 2020 results.

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Specifically, the Nigerian Stock Exchange, NSE,  All Share Index,  ASI index climbed further by 0.35 percent week-on-week, WoW, to close at 25,309.37 points amidst bargain hunting for equities with sound fundamentals and prospects for positive 2020 third quarter, Q3’20, earnings.

Analysts have emphasized that portfolio repositioning and rebalancing are ongoing ahead of the  Q3’20 and Q4’20 given that the NSE index has been in the short-term overbought region, forming a double top chart pattern that supports imminent pullbacks and price corrections.

Analysts at InvestData Limited said: “The interim dividend paying banks continue to delay the release of their audited half-year earnings reports, fueling the need for more caution in trading by investors.

‘‘We expect the current trend to continue on profit taking and portfolio adjustment ahead of the interim dividends from Stanbic IBTC, GTB, Zenith Bank, Access Bank and UBA that have kept the market above the 50-day moving average on a daily time frame.”

In their own reactions, analysts at Cowry Asset Research said: “In line with our expectation, the equities market remained bullish for the sixth consecutive week as investors’ sentiment for insurance, consumer goods and industrial stocks remained strong.

‘‘In the new week, we expect the local bourse index to close higher as investors take advantage of the low share prices of stocks with good fundamentals, especially the Tier-1 banks that are likely to pay interim dividends.”

Analysts at Afrinvest Research stated: “Following consecutive weeks of gains, we expect to see some profit-taking in early trades this week.”

The profit taking would lead to temporary declines in stock prices.

Meanwhile, analysis of trading last week shows that the uptrend in the local bourse persisted  as sustained buying interest in BUA Cement  (2.8%), Stanbic IBTC  (4.5%) and Guaranty Trust Bank (1.2%) supported overall performance.

Consequently, the NSE All-Share Index closed in the green on four of the five trading sessions in the week, rising 0.3% WoW to settle at 25,309.37 points.

Similarly, Year to Date, YtD return improved to -5.7% while market capitalization rose N45.6 billion W-o-W to close at N13.2 trillion. Activity level was mixed as average volume rose 12.8% to 214.3million units while average value declined 27.1% to N1.5billion.

Vanguard

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