RoI: NGX tasks investors on portfolio diversification

•Equities market declines 0.57%

By Peter Egwuatu

The Nigerian equity market, last week, recorded mixed sentiment and buying interest as investors traded cautiously since deadline for the submission of 2021 audited financial results of companies draw closer.

Consequently, the Nigerian Exchange Limited, NGX, All Share Index, ASI,   declined  0.57 per cent or 318 points Week-on-Week, WoW,  to close at 46,964.23 points from 47,282.67 points. 

In the same way another major performance indicator, market capitalization, declined by over N171 billion to close Friday at N25.311 trillion from N25.482 trillion the previous week.

The negative performance was due to bouts of profit-taking activities in heavyweight stocks, namely NESTLE  Nigeria which declined 2.8 per cent , UBA 2.6 per cent, Guaranty Trust Bank Holding, GTCO 1.4 per cent, MTN Nigeria -0.7 per cent, and Lafarge 0.6 per cent.

The Month-to-Date, MtD, and Year-to-Date,  YtD, return dropped  to  0.9 per cent  and 9.9 per cent, respectively.

Analysts opined that market players continue to keenly observe the nation’s economic developments and what is happening in the fixed income market with yields and rates becoming mixed and flattish.

There were noticeable increase in the rate at which listed companies are giving notice of their closed periods and board meetings to consider their first quarter, Q1 2022 financials, ahead of the March 31, 2022 deadline for the submission of audited reports for the 2021 year-ended December 31.

Commenting on market performance, analysts at Cordros Securities Limited said: “In the week ahead, we expect the market to trade sideways as the activities of bargain hunters in dividend-paying stocks fizzle out due to the winding down of the 2021 full year earnings season. In addition, risk-averse investors will likely sustain profit-taking activities in anticipation of an uptick in Fixed Income, FI, yields.

‘‘Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.’’

On market outlook for the new week, analysts at InvestData Consulting Limited said: “We expect sustained improved sentiments on higher dividend yields, as bargain hunters take advantage of the pullbacks to position and investors digest the inflation data, ahead of the inflow of more 2021 audited financials with dividend announcements.

‘‘This is expected to support an uptrend during this earnings season, amidst the oscillating oil prices, just as the market continues to interpret economic data in relationship with crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing.”


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