Why Nigerian stocks are turning around
After weeks of downtrend, the Nigerian equities market is beginning to see a turnaround to return to the green in the last two trading sessions, gaining marginally by N6 billion on Tuesday and N29 billion on Wednesday.
In addition to the profits that brought respite to investors, the market on Wednesday saw improved activity level as volume and value traded soared significantly by 38.94 per cent and 84.14 per cent respectively.
While rising yields in the fixed income market and profit-taking had been fingered for the initial losses in the equities market, analysts have ascribed the current comeback of the bulls to optimism about the banking stocks’ 2020 audited earnings.
for example, Zenith Bank’s financial numbers released into the market on Tuesday beat expectation, just as its corporate action of N2.70 final dividend that brings total payout to N3.00 per share, from gross earnings and bottom lines growth of 5.2 per cent and 10.4 per cent respectively.
The lender also maintained a pattern of consistently growing its earnings on a quarterly and yearly base. Zenith Bank’s numbers translate to Earnings Per Share of 734 kobo and a dividend yield of 10.89 per cent, as at close of trading on Tuesday.
This aroused buying interests in banking stocks on Wednesday, as early filer among the first-tier banks hit the market with positive dividend news despite the effects of the Coronavirus pandemic that pushed the economy into a second recession, impacting negatively on the non-performing loans of banks according to data from the Central Bank of Nigeria (CBN).
Given that the banking stocks are dividend-paying and are seen as elite stocks with strong impact on the collective market performance, experts have expressed expectations that the bulls may succeed holding the ground for as long as financial results from the sector continue to reel out, while waiting for another strong trigger.
The local equities market inched up by 0.14 per cent at the end of midweek session with the All-Share Index (ASI) and market capitalization closing at N40,221.30 basis points and N21.044 trillion respectively. Accordingly, the Month-to-Date (MtD) and Year-to-Date (YtD) losses moderated to -5.2 per cent and -0.1 per cent, respectively.
Particularly, the market’s posture for the session followed investors’ interests in WAPCO (+3.5 per cent), ZENITHBANK (+1.2 per cent) and GUARANTY (+1.0 per cent) stocks.
In addition, market also received boost from rally on the stock of OANDO, following its exoneration from a legal tangle with the Security and Exchange Commission (SEC).
Oando Plc joined the Nigerian Stock Exchange (NSE) top gainers with a 10 per cent increase in share price from N3.18 on Tuesday, to N3.41 on Wednesday.
The share price appreciation can be attributed to the recent announcement of the nullification of the SEC’s suspension of Oando’s Annual General Meeting (AGM), in a ruling presided over by Justice O A Musa, at the High Court of the FCT.
On sectors, performance was mixed following 0.8 per cent gains in the Oil & Gas and Banking indices each as well as 0.2 per cent appreciation in industrial goods index, while the Insurance and consumer goods shed -1.9 per cent and -0.3 per cent accordingly.
As measured by market breadth, market sentiment was negative as 19 tickers declined, relative to 20 gainers.
Trading statistics shows that according to percentage gains, OANDO Plc led other gainers as it added N0.31 to close at N3.42 per share, followed by ABNTRANS that gained N0.03 to close at N0.35 per share.
Other gainers include JAPAULGOLD, ROYALEX and ACADEMY, gaining N0.06, N0.02 and N0.03 to close the day at N0.71, N0.25 and N0.41 per share respectively.
The decliners’ list was topped by LASACO, shedding N0.13 to close at N1.12 per share.. CHIPLC trailed with N0.3 to close at N0.33. CONERST shed N0.05 to close at N0.59 while FLOURMILL and WAPIC lost N2.15 and N0.04 to close at N28.85 and N0.54 in that order.
At the end of the session, investors traded a total of 469.562 million shares valued at N7.081 billion in 5,470 deals in contrast with 337.955 million share units worth N3.845 billion that exchanged hands in 5,232 transactions in the previous session.