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Investors weigh-in macroeconomic trend

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Those running Nigeria's Economy not Professionals ― NES

Lose N93bn despite market rebound

By Nkiruka Nnorom

Having come to the end of the 2020 full year earning season where more than 70 percent of the quoted companies have published their financial results, analysts have projected that developments in the macroeconomic space will determine investors’ decision going forward.

A total of 112 companies, representing 72 percent of companies quoted on the Nigerian Stock Exchange, NSE, have already published their 2020 financial results.

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Meanwhile, investors closed the week with N93 billion losses in the ensuing bearish run driven by profit taking in some blue chip companies.

Though the market had recorded marginal gains in the last three trading days of the week, but the gains were not enough to offset the heavy losses recorded at the beginning of the trading week on Tuesday, April 6, 2021.

Consequently, the All-Share Index (ASI)  declined by 0.5 percent to close at 38,866.39 points bringing the Year-to-Date (YtD) loss to -3.7 percent.

Similarly, the market capitalisation of all the listed equities declined by 0.5 percent to close at N20.335 trillion from N20.428 trillion in the previous week. 

Notably, profit-taking in large-cap stocks:  Guaranty Trust Bank (-3.5%), Lafarge Africa (-3.0%), BUA Cement (-1.0%), and zenith Bank (-0.7%) drove the weekly loss. 

Analysis of the sectoral performance showed that activity was negative, as four of the five sectors indices closed in red. 

With the exception of the consumer goods sector that rose by  1.1 percent,  all the others  – the banking (-2.5%), insurance (-1.5%), industrial goods (-0.7%), and oil and gas (-0.3%) sectors closed in the red.

Lilian Olubi, CEO,  EFG Hermes Nigeria,  explaining the current trend in the market, said: “What we are seeing now is the current rotation out of equities and the trend before now was that when the rate was a bit low, a lot of the Pension Fund Administrators (PFAs) came back to the market in measured terms but they came nonetheless. 

“So, now, we are seeing retreat from that action. Though yields are inching up slowly, we still have a negative real return environment given how high the inflation rate is.”

 In their forecast for the week, analysts at Cordros Capital, said: “Taking a cue from the trading pattern that ensued this week, we expect market activities to be quiet in the short term as investors keep their gaze on yields direction in the fixed income market. 

“Considering that the full year 2020 earnings season is gradually coming to a halt, we now expect investors’ sentiment to be influenced by developments in the macroeconomic landscape and corporate actions.”

Vanguard News Nigeria 

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