THE Nigerian equities market starts the new year on a bearish turn, even has investors positions themselves for a sour first quarter of the year trading cautiously towards the much anticipated general election jitters.
In their market expectations report for 2019, analysts at Financial Derivatives Company (FDC) said investors should prepare for the worst this year.
However, they opined that things might get better if the nation record violence-free general elections taking place in few months’ time, adding that earnings season in the third quarter of 2019 will drive valuation of stocks at the market.
The company’s analysts said in the first quarter of this year, investors should expect the persistence of the bearish market as political fracas intensifies, forcing FPI outflow to further push NSE All-Share Index (ASI) south.
They said that in the second quarter, the market index will reach a low point, but will pick up on the back of a violence free handover.
“In the third quarter of the year, there would be a gradual restoration of investor confidence, increasing market activities, increasing FPI inflows and drive in the valuation of stocks on the back of earnings season.
In the fourth quarter of the year, there would be further increased investors confidence, positive market performance driven by increasing demand, while MTN likely to have completed listing process.”
Hope seem not lost as tgere are assurance that the market will weather the election storms.However, it was stressed that the local stock market would reverse negative trend after the elections, while more companies will approach the debt market to raise fresh funds to boost their operations, with Access Bank which announced late last year of its plan to raise funds in the wake of its merger with Diamond Bank.
Therefore, gradual restoration of investor confidence, increasing market activities, increasing FPI inflows are being anticipated to hit Nigeria’s capital market by the beginning of the third quarter of the 2019 financial year.
These anticipations by economistsare heightened by the earnings season of the same period projected to drive valuation of listed stocks.
These projections will usher in positive market performance in the fourth quarter of 2019, driven by increasing demand in the market with MTN being pegged to have likely completed its listing process by Q4.
For the first week activity on the Nigerian Stock Exchange (NSE) for the year 2019, , market activity continued on a bearish note to end with a 1.3 percent loss in the All Share Index (ASI)
Specifically, the Nigerian Stock Exchange (ASI) closed the week at 30,638.90 basis points, down by 1.28 percent while market capitalization decreased by N88.4 billion to close the week at N11.426 trillion
Performance across the sectors that make up the market also closed the week bearish, except for the NSE oil and gas index that rose by 2.91 percent, on account of an 8 percent share price appreciation in Seplat Petroleum Development Company Plc and a 3.6 percent growth in sdhares of Total Nigeria Plc.
The industrial goods index was the biggest loser, down 3.9 percent due to losses in WAPCO (-9.6%) and Cement Company of Northern Nigeria (-7.5%). The banking index trailed, falling 2.7% as Access Bank (-14.7%) and Zenith bank (-5.7%) witnessed price depreciation. In the same vein, sell-offs in AXA Mansard (-3.7%), AIICO Insurance (-7.2%), Dangote Flour (-12.4%) and Nigerian Breweries (-3.0%) dragged the insurance and consumer goods indices 1.0% lower apiece.
As the Federal Government of Nigeria declared Tuesday 1st January 2019 a Public Holiday to mark the New Year celebrations, the market opened for four trading days last week, with investors pulling a total turnover of 1.647 billion shares worth N8.413 billion in 14,773 deals.
This was in contrast to a total of 3.129 billion shares valued at N14.348 billion that exchanged hands previous week in 10,394 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.154 billion shares valued at N5.742 billion traded in 9,174 deals; thus contributing 70.08 percent and 68.25 percent to the total equity turnover volume and value respectively.
The Healthcare Industry followed with 271.277 million shares worth N82.647 million in 219 deals. The third place was taken up by the services industry with a turnover of 91.734 million shares worth N 208.562 million in 232 deals.
Top three traded equities by volume for the week were Diamond Bank Plc, Union Diagnostic & Clinical Services Plc and NEM Insurance Plc. They accounted for 816.016 million shares worth N1.305 billion in 1,615 deals, contributing 49.54 percent and 15.51 percent to the total equity turnover volume and value respectively.
Twenty-two equities appreciated in price during the week in review, lower than fifty-two in the previous week. Forty-five equities depreciated in price, higher than eighteen of the previous week, while 97 equities remained unchanged higher than ninety-four equities recorded in the preceding week.
Also traded during the week were a total of 395 units of Exchange Traded Products (ETPs) valued at N816,344.70 executed in 13 deals compared with a total of 25,500 units valued at N1.782 million that was transacted last week in 15 deals.
A total of 7,209 units of Federal Government Bonds valued at N6.958 million were traded this week in 8 deals compared with a total of 686 units valued at N689,162.04 transacted last week in 3 deals.
Pre-election jitters is expected to further fuel a bearish performance this week as sell pressures heighten, investment experts said on Friday.
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