SAT 20 FEB, 2021-theGBJournal-The bearish performance in the local bourse extended to a third consecutive week, as the upward retracement in yields in the FI market continue to dampen investors’ sentiments.
The bond auction results, wherein stop rates rose by an average of 254bps to 11.10% (from 8.56% at the last auction), further magnified the downbeat mood during the week.
Accordingly, the All-Share Index shed 0.6% w/w to close at 40,186.70 points. Consequently, the YTD return swung into negative territory, settling at -0.2%. Activity levels were weak, as volume and value traded declined by 42.6% w/w and 22.9% w/w, respectively. Notably, sell-offs in STANBIC (-14.0%), BUACEMENT (-1.8%) and MTNN (-1.1%) drove the weekly loss.
The sectoral performance was broadly negative. Save for the Oil and Gas (+4.6%) and Banking (+0.5%) indices that posted gains, the Insurance (-1.7%), Consumer Goods (-1.0%) and Industrial Goods (-0.7%) recorded losses.
We expect the deluge of corporate earnings accompanied by dividend declarations to temper bearish sentiments in the week ahead. However, we do not rule out the possibility of continued profit-taking activities due to growing concerns about yield elevation in the FI market. As a result, we think the local bourse will likely exhibit a zig-zag pattern.
Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.
Meanwhile, Global stocks posted mixed performances as investors’ sentiments were shaped by a slew of weak economic data, particularly in the U.S, hopes of additional fiscal stimulus from the Biden administration, and rising bond yields amid vaccination progress.
Consequently, U.S (DJIA: +0.1%; S&P: -0.5%) stocks retraced from the highs attained in the prior week. In Europe, the STOXX Europe (-0.2%) and FTSE 100 (+0.3%) also lost momentum as weak U.K retail sales data dampened vaccine-induced optimism that has been supportive of bullish sentiments in the past two weeks.
In Asia, the Nikkei 225: (+1.7%) and SSE: (+1.1%) held up gains accumulated earlier in the week despite sell-offs later in the week due to concerns about market overheating. Emerging markets (MSCI EM: +3.4%) stocks posted robust gains on the back of bullish sentiments in China (+1.1%), while Frontier (MSCI FM: 0.1%) market stocks recorded marginal gains, following losses in Nigeria (-0.6%).