Equities market to record mixed performance

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Stories by Nkiruka Nnorom

INVESTMENT analysts in the Nigerian capital market have said that activity in the equities market will be dotted by a mixture of profit taking and bargain this week.
According to Dr. Samson Amedu, Managing Director/CEO, Alangrange Securities Limited, the mixed performance would be driven by window dressing by fund managers who usually re-evaluate their portfolio at the end of each month.

“A number of times, fund managers decide to re-evaluate their portfolio at the end of the month. That activity usually occur at the end of the month and affects the equities market either positively or negatively, he said.

“Most of the firms have declared their second quarter result and a number of them are looking forward to the end of the third quarter. So , there is little activity for now except for few interim dividends that have been declared by some tier 1 banks. But that alone was not significant to move the market in the positive direction,” Amedu said.

Analysts at Cowry Asset Management and Vetiva Capital Management are of the consensus opinion that bargain hunters and profit takers would hold sway. “As trading resumes at week open, we expect to see more mixed trading in the market but still with a slight bearish bias, said analysts at Vetiva Capital.

Explaining the downturn in the market during the month, Amedu said: “Traditionally, at this time of the year, the market always goes down because it is the end of earning season. So, there is no justification for the market to be going up at this time. Why the market has not really gone down as it should is because of the expectation that Nigeria will be put back in the Morgan Stanley Frontier Index”.

Meanwhile, analysis of trading in the market last week showed that investors lost N394 billion between Monday and Thursday as the bears continue to dominate activity according to expectations. This led to a drop in the equities capitalisation to N12.237 trillion from N12.631 trillion in the previous week, representing 3.12 per cent decline. The All Share Index, ASI, was also down 3.12 per cent to 35,504.62 points from 36,646.46 points.

Three of the sectorial indices – the consumer goods, industrial goods and the banking sectors – closed lower, while the insurance and oil and gas sector recorded piece appreciation.
The consumer goods sector led the sectoral losers, dropping by 2.88 per cent on account of 5.25 per cent losses in Nigerian Breweries, NB Plc. The industrial goods sector, followed, falling by 2.48 per cent, while the banking sector affected by 6.19 per cent losses in United Bank for Africa, UBA Plc, went down by 2.36 per cent. The insurance sector appreciated the most during the week, rising by 1.90 per cent driven by 13.95 per cent gain in Continental Reinsurance Plc, while the oil and gas despite trading lower for most of the week rose by 0.29 per cent.
At the end of the week, investors exchanged 998.973 million shares worth N11.455 billion in 13,626 deals.

The financial services sector, measured by volume, led the activity chart with 838.247 million shares valued at N5.134 billion in 7,884 deals; thus contributing 83.91 per cent and 44.82 per cent to the total equity turnover volume and value respectively. The consumer goods sector followed with 45.589 million shares worth N3.225 billion in 2,759 deals. The conglomerates sector ranked third, accounting for 35.563 million shares worth N60.673 million in 627 deals.

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