With outlook for the equities market remaining bearish till stability is regained after the 2019 general elections, capital market analysts are advising investors, particularly long term investors to position in cheap assets that have sound fundamentals so as to take advantage of the anticipated post-election rally.
Stocks have continued to receive a battering amidst the political jitters, leaving a good number of them now cheaply priced. So far equities market year to date return is in a negative region of 5.1 percent. The All Share Index in the course of last week trading activities fell below the 30,000 psychological mark and sentiments have remained largely soft, analysts at Afrinvest said Friday.
They however noted that entry opportunities exist as persistent sell-offs, especially in market bellwethers propels weakened prices, thereby weighing heavily on market performance.
“In the course of last week’s trade, investors exited positions in Dangote Cement, Guaranty Trust Bank, United Bank for Africa, Nestle, Unilever and Access Bank. This action dragged the benchmark index below the 30,000 mark on the 9th of January 2019, the first time since May 2017,” they pointed out.
Also worthy of note is the persistent sell pressures witnessed in Access Bank which fell 2.6 percent last week amidst a buying interest in Diamond bank that grew by 12.2 percent last week. They explained that the demand for the latter stock has remained upbeat following the premium investors will earn at the conclusion of the entities’ merger.
Nevertheless, the All Share index fell 2.6 percent last week to 29,830.70 points, YTD return settled at -5.1 percent while market capitalisation decreased by N301.4 billion to N11.1 trillion. Activity level ended mixed with average volume traded declining by 38.5 percent to N253.1 million units while value traded rose by 33.8 percent to N2.8 billion.
In the course of the week, Diamond Bank, FBN Holdings and Zenith topped traded volumes with 184.4m units, 109.7m units, and 102.9m units exchanged respectively while Zenith, GTB and Nestle led value traded with N2.2bn, N2.1bn and N2.0bn worth of stocks traded respectively.
Performance across sectors was largely negative as all indices save for the industrial goods index closed
in the red last week.
The insurance index was the biggest loser, down 7.0 percent due to losses recorded in NEM Insurance (-33.5%) and Custodian and Allied Insurance (-13.1%), the largest stocks on the index.
Similarly, price depreciation in Guinness (-8.1%) and Flourmill (-11.7%) dragged the consumer goods index 3.6
percent lower while sell pressures in UBA (-7.0%), ETI (-3.6%), Seplat (-10.0%), Forte (-2.0%) and Total (-1.4%) dipped the banking and oil & gas indices lower by 0.9 percent and 6.3 percent respectively . On the flip side, the industrial goods index rose 1.0 percent due to buying interests in Julius Berger (22.2%) despite sell offs in Dangote Cement (-4.8%).
As against the previous week, investor sentiment measured by market breadth (advance/decline ratio), strengthened to 0.5x from 0.4x with 22 advancing stocks against 42 that declined.
The best performing stocks for the week were Julius Berger (+22.2%), Diamond Bank (+12.2%) and Transcorp (+11.2%) while NEM Insurance (-33.5%), Resort Savings and Loans (-26.0%) and Unity Bank (-17.0%) led laggards.