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Stocks lose N257bn to weak investors’ appetite

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Equities shed N7bn as banking stocks go bearish

The Nigerian stocks closed last week on a negative note as investors’ risk appetite remained weak amid expectation of poor half-year performance.

Meanwhile, the stock market’s movement aligned with several projections by investment analyst firms and individuals who envisaged that the month of July is in for slow activities and negative sentiment.

The market shed N257 billion at the close of the first week in the month as the All-Share Index (ASI) of the Nigerian Stock Exchange (NSE) plunged by 2.03 per cent to close lower 24,336.12 basis points.

Similar to that, the total valuation of equities investment as the market followed suit, depreciating by N12.695 trillion from N12.965 it closed the previous session.

Meanwhile, last week’s losses were mostly by triggered by selloffs in the stocks os BUACEMENT, MTN Nigeria and UNILEVER, losing by -2.3 per cent, -1.3 per cent and -18.8 per cent respectively as well as banking stocks.

Accordingly, the Month-to-Date (MtD) and Year-to-Date (MtD) losses printed -0.6 per cent and -9.3 per cent, respectively.

Sectoral performances were negative, with the Banking index shedding -7.5 per cent;  industrial goods losing -6.4 per cent,’; insurance index depreciating by -2.2 per cent;  Oil & Gas flattening by -1.2 per cent and Consumer Goods index lost value by -0.5 per cent on recording weekly losses.

“In our opinion, 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 trade cautiously and seek trading opportunities in only fundamentally justified stocks,” analysts at Cordros Capital Limited counseled.

Harsh projections have been made regarding the second half year of 2020, starting from July, in view of many factors of macroeconomy and a looming recession.

From a fundamental perspective, July is an earnings reporting month which would span the April to June period where the coronavirus pandemic hit the economy and many businesses hard.

Thus, experts expect many companies to report significantly weak numbers save for telecoms, logistics, pharmaceuticals and food focused companies.

From a technical analysis perspective, according to analysts the ASI remains very close to the overbought region with Relative Strength Index (RSI) at 53 per cent.

“This indicates the market in July has more downside potential than upside potential. In addition, investors have not been enthusiastic about taking positions in the market, with average activity level in June remaining below 2020 monthly average,” the analysts said.

Meanwhile, the downtrend also reflected on market turnovers as volume and  value traded slipped by 30 per cent and 7.22 per cent respectively, which indicates lull.

A total turnover of 961.833 million shares worth N9.181 billion in 20,058 deals were traded by investors on the floor of the Exchange, in contrast to a total of 739.375 million shares valued at N8.563 billion that exchanged hands in 17,248 deals previously.

The Financial Services industry, measured by volume, led the activity chart with 618.714 million shares valued at N4.338 billion traded in 9,669 deals; thus contributing 64.33 per cent and 47.25 per cent to the total equity turnover volume and value respectively.

The Consumer Goods industry followed with 91.119 million shares worth N2.227 billion in 3,703 deals, while the third place was the conglomerates industry, with a turnover of 60.640 million shares worth N62.779 million in 556 deals.

In terms of volume, trading in the top three equities namely FBN Holdings Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc accounted for 275.099 million shares worth N2.818 billion in 3,497 deals, contributing 28.60 per cent and 30.69 per cent to the total equity turnover volume and value respectively.

A total of 358,114 equity traded products (ETFs) units valued at N1.912 billion were traded in the week in 25 deals, compared with a total of 199,011 units valued at N1.525 billion transacted last week in 13 deals.

Investors also traded a total of 4,590 units of bonds valued at N5.515 million in 14 deals during the week compared with a total of 9,284 units valued at N10.180 million transacted last week in  eight deals previously.

 

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