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Stocks Rebound on Renewed Demand, Bargain Hunting

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Stock Investors

The Nigerian stocks equities rebounded last week after two weeks of bear run, appreciating by 1.48 per cent following renewed demand on the back of bargain hunting and positive reactions to the results impressive results of Access Bank Plc and Guaranty Trust Bank Plc(GTBank).

Investors’ sentiments had remained negative in the past weeks due to weak half year (H1) corporate results of most companies. Also, many investors saw the fixed income market as a safer investment destination following the recent hike in Monetary Policy Rate (MPR), leading to a significant flow of investments into the fixed income market. This development priced down most equities, thereby creating an entry opportunity for discerning investors.

The renewed demand for equities by such discerning investors led the market to close on a bullish note last week with the Nigerian Stock Exchange (NSE) All-Share Index, rising by 1.48 per cent to close at 28,642.25. Similarly, market capitalisation added N117.4 billion to be at N9. 5 trillion. Trading volume also improved by 20 per cent to N12.940 billion staked on 1.375 billion, up from N10.711 billion invested in 1.361 billion shares.

With the exception of the NSE Insurance Plc and NSE Oil and Gas Indices that depreciated, other sectoral indicators appreciated while NSE ASeM Index closed flat. The NSE Consumer and Industrial Goods indices advanced the most, up 2.6 per cent apiece on the account of rally in Nigerian Breweries Plc ( 5.8 per cent) Unilever Nigeria(10.2 per cent), Lafarge Africa Plc (+5.1 per cent) and Dangote Cement (+1.7 per cent). The Banking Sector Index rose 2.1 per cent on gains in GTBank (+4.1 per cent), which reported a six month gross earnings and profit after tax (PAT) of N209.9 billion and N77.5 billion respectively. Similarly, Access Bank gained 1.6 per cent after reporting gross earnings and PAT of N185.2 billion and N39.5 billion in that order. Conversely, the NSE Insurance Index declined 1.2 per cent as a result of losses in Continental Reinsurance Plc (-3.0 per cent) and Custodian (-2.3 per cent).

Daily Performance Summary

The bulls dominated the market , being in control for four days. The NSE ASI trended northwards from Monday to Wednesday, appreciating 0.26 per cent, 0.27 per cent and 0.18 per cent in the first three trading sessions before easing on Thursday due to profit taking. However, the bulls resurged on Friday, up 0.6 per cent. Trading had opened for the week on Monday on a bullish note, with the NSE appreciating by 0.26 per cent to close at 27,316.52. Similarly, the NSE Industrial Goods Index rose 1.98 per cent and Consumer Goods (+0.86 per cent).On the other hand, the NSE Oil and Gas (-2.23 per cent) and NSE Banking indices suffered losses of 2.23 per cent and 1.66 per cent respectively. Market breadth was negative with 11 gainers versus 37 losers. Total volume traded decreased by 45.41 per cent to 213.64 million shares, valued at N2.05 billion, and traded in 3,742 deals.

The bullish sentiments persisted on Tuesday following sustained interest in large cap stocks such as Zenith Bank, GTBank and Nigerian Breweries as the NSE ASI rose by 0.27 per cent. On Wednesday, the positive momentum in the equities market continued with the NSE ASI gaining 0.2 per cent to close at 27,437.25. Market capitalisation added N16.6 billion to close at N9.4trillion.

However, the market could not sustain the bullish run on Thursday as the NSE ASI decline by 0.1 per cent to close at 27,420.99, while market capitalisation N5.6 billion to be N9.4 trillion. The market was dragged by sell-offs in GTBank (-1.2 per cent), Guinness (-3.8 per cent), Union Bank (-4.8 per cent) and Transcorp (-4.6 per cent).

Market Turnover

Meanwhile, market turnover stood at 1.375 billion shares worth N12.940 billion in 16,915 deals were traded by investors on the floor of the exchange in contrast to a total of 1.361 billion shares valued at N10.711 billion that exchanged hands the previous week in 16,070 deals.

The Financial Services Industry led the activity chart with 1.195 billion shares valued at N8.631 billion traded in 10,365 deals, thus contributing 86.90 per cent and 66.70 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 76.489 million shares worth N154.736 million in 964 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 38.048 million shares worth N1.768 billion in 2,676 deals.

Trading in the top three equities namely, United Bank for Africa Plc, Access Bank Plc and FBN Holdings Plc accounted for 559.065 million shares worth N2.452 billion in 3,690 deals, contributing 40.66 per cent and 18.95 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 57,828 units of Exchange Traded Products (ETPs) valued at N766,162.96 executed in 37 deals, compared with a total of 1,003 million units valued at N12.116 million transacted last week in 43 deals.

A total of 3,127 units of Federal Government Bonds valued at N3.057 million were traded in six deals compared to a total of 4,044 units of Federal Government Bonds valued at N4.062 million transacted last week in six deals.

Gainers and Losers

The price movement chat showed that 25 equities appreciated in price during the week, higher than 18 equities of the previous week. Conversely, 39 equities depreciated in price, higher than the 38 equities of the previous week, while 116 equities remained unchanged lower than one hundred and 124 equities recorded in the preceding week. Unilever Nigeria Plc led the price gainers with 10.2 per cent, followed by N.E.M Insurance Plc with 10 per cent. Nigerian Breweries Plc gained 5.7 per cent, while Lafarge Africa Plc 5.1 per cent. Other top gainers include: Eterna Plc (5.1 per cent); Seven-Up Bottling Company Plc (4.9 per cent); Stanbic IBTC Holdings Plc (4.3 per cent); GTBank Plc (4.1 per cent); Fidelity Bank Plc (4.0 per cent); Livestock Feeds Plc (3.3 per cent).

On the contrary, Champion Breweries Plc led the price losers with 19.5 per cent, trailed by Wema Bank Plc with 15.1 per cent, while National Aviation Handling Company Plc appreciated by 14.0 per cent. Cement Company of Northern Nigeria Plc appreciated by 11.9 per cent.

Other losers are: Fidson Healthcare Plc (11.6 per cent); AIICO Insurance Plc (10 per cent); Conoil Plc (9.6 per cent), UACN Property Development Company Plc (9.4 per cent); Unity Bank Plc (8.1 per cent) and International Breweries Plc (8.0 per cent.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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Nigeria's economic Productivity

OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Crude Oil

Brent Crude Oil Rose to $56.25 Per Barrel

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oil

Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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