RoI: NGX tasks investors on portfolio diversification

By Peter Egwuatu

Investors in the equities market have gained N5.5 trillion or 25.4 per cent, since the beginning of the year till Friday last week (Year to Date, YtD) as the Nigerian Exchange Limited NGX market capitalisation rose to  N27.358 trillion from N21.825 trillion at the close of trading last year 2021.

Also, despite profit taking activities that characterised the market last week, investors gained N196 billion as market capitalisation in the penultimate week closed at N27.16 trillion.

Pertinently, another stock market gauge, the NGX All-Share Index ended last week 0.7% higher, settling at 50,722.33 points.

Gains in MTN Nigeria at 7.4% , BUA Foods 7.2%,  Zenith Bank 5.8%,  Stanbic IBTC  9.2%, and WAPCO 8.8% spurred the weekly gain.

However, activity levels were weaker, as trading volume and value declined by 54.3%  Week on Week, w/w and 21.1% respectively.

Sectoral performance was mixed as the Consumer Goods Index  gained  3.0%,  Banking Index 2.6% and Oil and Gas Index 0.6%  while the Industrial Goods Index dropped by 5.8% and Insurance Index 0.4%.

Analysts at Cordros Research stated:” In the interim, we believe the full swing of the first half 2022, H1’22 earnings season will dictate market sentiments and possibly drive positive performance as investors hunt for bargains in fundamentally sound stocks with a consistent history of interim dividend payments. “Notwithstanding, we envisage intense selling pressures on stocks of companies that grossly underperform in H1’22. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.”

In their market outlook, analysts at InvestData Consulting said: “Expect a mixed trend and sentiments to continue on bargain hunting as players react to impressive half-year financials of companies in the midst of sovereign risks, as interim dividends are expected from first-tier banking stocks. We also note the flow of funds into the fixed income segment on the rate hike by the CBN, as sector rotation persists.”

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