Corporate earnings lift stock market index by 1.09%

Despite the two public holidays declared by the Federal Government to mark the Eid-El-Kabir celebrations, the influx of corporate earnings last week propelled activities on the equities sector of the Nigerian Stock Exchange (NSE), last week, as the All-share index and market capitalisation both gained 1.09 per cent to close the week at 24,693.73, and N12.882 trillion, respectively.

Similarly, all other indices finished higher with the exception of NSE ASeM, NSE Consumer Goods, and NSE Oil/Gas Indices, which depreciated by 0.06 per cent, 0.44 per cent, and 6.51 per cent, respectively.

Despite the upturn in last week’s trading, analysts predicted pullbacks this week, due to unimpressive earnings reports released by some sectors especially from companies in the oil and gas sector.

According to them, most of the companies’ scorecards that were released so far reflected the effects of the lockdowns occasioned the coronavirus pandemic, as most of the companies posted negative and mixed numbers.

The Chief Research Officer, Investdata Consulting, Ambrose Omodion, said the few outstanding numbers so far are from United Capital, Jaiz Bank, Okomu Oil, Lafarge Africa, and Prestige Assurance.

“The sectors that posted the worst earnings performance are consumer goods and petroleum products marketing, considering the numbers that emanated from Unilever, Cadbury, International Breweries, Total Nigeria, Seplat, and Eterna and CAP.

“This is likely to influence dividends pay-outs for this current financial year negatively across some sectors and companies, while those benefiting from the pandemic and economic shutdown are likely to grow their dividends for the year.

However, he explained that investors are buying presently to increase their positions in undervalued stocks ahead of Q2 numbers.

He also added that sectors that have suffered oversold, offer attractive risk-reward buy-opportunities and outlook for considerable short, medium and long term investment

Furthermore, he advised investors to trade low priced stocks with serious caution to avoid being trapped.

“Again, the current undervalued state of the market offers opportunities to position for the short, medium and long-term.

“This is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation going forward.”

Analysts at Codros Capital said: “Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions.

“Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”

Last week, a turnover of 421.984 million shares worth N5.337 billion was recorded in 11,801 deals by investors on the floor of the exchange, in contrast to a total of 1.350 billion shares valued at N14.433 billion that was exchanged hands in 16,723 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 249.588 million shares valued at N1.563 billion traded in 5,899 deals; thus contributing 59.15 per cent to the total equity turnover volume and value respectively.

The consumer goods industry followed with 51.760 million shares worth N1.072 billion in 1,877 deals. The third place was the Industrial goods industry, with a turnover of 46.197 million shares worth N833.473 million in 1,489 deals.

Trading in top three equities namely, WAPCO Plc, FBN Holdings Plc and Mutual Benefit Assurance Plc. (measured by volume) accounted for 110.114 million shares worth N685.942 million in 1,587 deals, contributing 26.09 per cent and 12.85 per cent to the total equity turnover volume and value, respectively.

ETF’s 34,880 units valued at N44.775 million were traded this week in 22 deals, compared with a total of 53,420 units at N444.544 million transacted last week in 14 deals.

A total of 11,909 units of bonds worth N15.732 million were traded this week in eight deals compared with 1,747 units valued at N1.985 million transacted last week in eight deals.

About 24 equities appreciated in price during the week, lower than 28 in the previous week, while 28 fell, higher than the 25 equities in the previous week. Also, 111 equities remained unchanged, higher than 110 recorded in the previous week.