FRI 23 APRIL, 2021-theGBJournal- Bargain hunting in banking stocks was the overarching theme during the week as investors flocked into banking names ahead of Q1-21 corporate earnings releases. Based on the preceding, the All-Share Index advanced by 1.3% w/w to close at 39,301.82 points. As a result, the YTD loss moderated to -2.4%.
Overall, a total turnover of 1.602 billion shares worth N42.142 billion in 19,507 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.263 billion shares valued at N10.759 billion that exchanged hands last week in 19,975 deals.
Sectoral performance was broadly positive as all sectors recorded gains. The Banking (+4.8%) index led the gainers’ chart followed by Consumer Goods (+1.0%), Industrial Goods (+0.5%), Insurance (+0.4%) and, Oil and Gas (+0.3%) indices.
The Financial Services Industry (measured by volume) led the activity chart with 1.029 billion shares valued at N9.188 billion traded in 11,095 deals; thus contributing 64.22% and 21.80% to the total equity turnover volume and value respectively. The ICT Industry followed with 215.482 million shares worth N29.855 billion in 566 deals. The third place was Conglomerates Industry, with a turnover of 118.458 million shares worth N675.954 million in 1,088 deals.
Activity levels were stronger than the prior week, as trading volumes and value rose significantly by 26.2% w/w and 290.6% w/w, respectively. Notably, bargain hunting in large-cap stocks; WAPCO (+8.8%), STANBIC (+8.7%), UBA (+7.9%), GUARANTY (+7.0%), and ZENITH (+3.7%) drove the weekly gain.
Trading in the top three equities namely Fidelity Bank Plc, MTN Nigeria Communications Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 580.760 million shares worth N34.392 billion in 3,197 deals, contributing 36.25% and 81.61% to the total equity turnover volume and value respectively.
In the week ahead, we expect NGX Exchange’s floor to be flooded with results as the Q1-2021 earnings season commences in full swing.
‘’We believe investors will be looking for clues on how corporate earnings will evolve in 2021, given the expected improvement in macroeconomic conditions,’’ Cordros Research analysts said.
According to Cordros, ‘’the local bourse is likely to close positive next week as we expect decent earnings releases across the board to temper selling activities stoked by the rising yields in the FI market. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.’’
Negative sentiments resurfaced across global markets after two weeks of gains. Investors were rattled by Biden’s plans to almost double capital gains tax and the growing number of COVID-19 cases globally, which softened hopes of a strong rebound in the global economy from the trough reached in 2020.
Meanwhile, in the U.S, the DJIA (-1.1%) and S&P (-1.2%) retreated from the highs attained in the prior week as the news on President Biden’s tax plans overshadowed the wave of solid corporate earnings released in the week. In Europe, the STOXX Europe (-0.9%) and FTSE 100 (-1.4%) slipped as the strengthening of the pound weighed on export-oriented companies amid fresh concerns on the global economy’s health.
In Asia, the Nikkei 225 (-2.2%) was on course for a negative close as negative sentiments on Wall Street fed into the market. In comparison, SSE (+1.4%) rallied due to strong corporate earnings that bolstered buying interest from mainland Chinese investors. Emerging markets (MSCI EM: -0.5%) mirrored the bearish trend in global equities, consequent to losses in South Korea (-0.4%) and India (-1.6%), while Frontier (MSCI FM: +0.2%) market stocks posted marginal gains, primarily driven by robust gains in Nigeria (+1.3%).