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Impressive Earning Reports Drive Equities to Positive Close

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Egypt Stocks
  • Impressive Earning Reports Drive Equities to Positive Close

The equities market recorded yet another positive close for second week in a row as investors continue to react favourably to impressive corporate earnings by some of the companies that released their results last week.

Although the impacts of macro-economic challenges varied across sectors, corporates exposed to the downside risk of macroeconomic headwinds were able to navigate the negatives in the operating environment by leveraging on scale, non-core earnings growth strategy, operating cost optimization, local input sourcing and other accounting ingenuity (usage of deferred tax assets) in order to stay profitable.

Specially, Nascon & Allied Industries Plc recorded year-on-year growth of 13.06 per cent, 16.53 per cent and 14.70 per cent in revenue to N18.29 billion, Profit-Before-Tax to N3.52 billion and Profit-After-Tax to N2.42 billion respectively. Also, the company proposed a dividend of N0.70 per share.

In the banking sector, Wema Bank recorded a positive full year result with the bank’s audited result showing growth in gross earnings by 18.48 per cent to N54.25 billion from N45.79 billion in 2015, while, PBT grew by 9.7 per cent to N3.28 billion from N2.99 billion in 2015.

The Okomu Oil Palm Plc recorded a 50.28 per cent increase in revenue to N14.364 billion and a 80.13 per cent increase in PAT to N4.91 billion, among other companies that released their results during the week. Consequently, the equities market by market capitalisation rose by N9 billion to N9.91 trillion, from N8.83 trillion penultimate week, representing 0.9 per cent increase. Similarly, the All Share Index, ASI, rose by 0.9 per cent from 25,516.34 points to settle at 25,746.52 points.

Sectoral Performance

Performance across the sectors was bullish, with exception of the banking sector that fell by 0.20 per cent. The insurance, consumer goods, oil and gas and the industrial sectors appreciated by 1.97 per cent, 0.80 per cent, 4.27 per cent and 5.15 per cent to close at 126.26 points, 632.83 points, 304.90 points and 1,678.80 points respectively.

Access, Unilever, Okomu Oil get buy rating

Meanwhile, analysts at Cowry Asset Management Limited have assigned buy rating to Access Bank Plc, Unilever Nigeria Plc, Okonu Oil Palm Plc and United Bank for Africa, UBA Plc with full year price target of N12.54, N85.66, N85.99 and N12.38 in that order. Others are Total Oil Nigeria Plc, Chemical and Allied Products Plc and Presco Plc with price target of N394.00, N43.00 and N58.40 respectively.

Expectation for the week

Analysts are of the opinion that the profit taking and bargain hunting would dominate activity in the market this week. They opined that investors are expected to maintain positive stance in the agriculture consumer goods and banking and sectors with more positive reactions to Okomu Oil and Gl;axoSmithKline results. They, however, stated that a reversal of the positive sentiment is expected in the health and insurance and oil and gas sectors within this week.

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.

Markets

Global Markets Near Record Peaks and Will Get Stronger: deVere CEO

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Stocks

As the FTSE 100 hits 7,000 points for the first time since the Covid pandemic, global stock markets are poised to “get even stronger”, says the CEO of one of the world’s largest independent financial advisory and fintech organisations.

The observation from Nigel Green, the chief executive and founder of deVere Group, comes as London’s index jumped over the important threshold in early trading in London, gaining over 0.5% to 7024 points.

Mr Green notes: “London’s blue-chip index is up 40% since the worst lows of the pandemic.

“This landmark moment represents the wider optimistic sentiment gripping global markets which are near record peaks.

“We can expect global stock markets to get even stronger as investors look to seize the opportunities from economies reopening.

“They are looking towards economies rebounding in a post-pandemic era due to the monetary and fiscal stimulus, pent-up cash and demand, and strong corporate earnings.

“The current ultra-low interest rate environment and the under-performance of bonds will also act as a catalyst for stock markets.”

However, the CEO’s bullish comments also come with a warning.

“I would urge investors to proceed with caution as there are some headwinds on the horizon, including relations between the U.S. and China, the world’s two largest economies, which could be coming to a tipping point in coming weeks.

“As such, in order to capitalise on the opportunities and mitigate risks, investors must ensure proper portfolio diversification.”

Mr Green concludes: “A variety of factors are going to drive global stock markets. Investors will not want to miss out and should work with a good fund manager to judiciously top-up their portfolios.”

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Markets

Refinitiv Expands Economic Data Coverage Across Africa

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Building on its commitment to drive positive change through its data and insights, Refinitiv today announced the expansion of its economic data coverage of Africa. The new data set allows investment managers, central bankers, economists, and research teams to use Refinitiv Datasteam analytical data for detailed exploration of economic relationships and investment opportunities among data series covering the African continent.

Securing reliable, detailed, timely, locally sourced content has not been easy for economists who have in the past had to use international sources which often can take many months to update and opportunities to monitor the market can be missed. Because Africa is a diverse continent, economists and strategists need more timely access to country-specific data via national sources to create tailored business, policy, trading and investment strategies to meet specific goals.

Africa continues to develop critical infrastructure, telecommunications, digital technology and access to financial services for its 1.3bn people. The World Bank estimates that over 50% of African inhabitants will be under 25 by 2050. This presents substantial opportunities for investors who can spot important trends and make informed decisions based on robust and timely economic data.

Stuart Brown, Group Head of Enterprise Data Solutions, Refinitiv, said: “Africa’s growing, dynamic and fast evolving economies makes it a focal point for financial markets today and in the coming decades.  As part of LSEG’s commitment to empowering the global markets with accurate and timely data, we are excited about making these unique datasets available via the Refinitiv Data Platform. Our economic data coverage of Africa will provide our customers with deeper and broader inputs for macroeconomic analyses and enable more effective investment strategies and economic research.”

Refinitiv Africa economic data coverage:

  • Africa economics content comprises around 500,000 nationally sourced time series data covering 54 African nations
  • Content is sourced from national statistical offices, central banks and other key national institutions
  • The full breadth of economics categories in Datastream including national accounts, money and finance, prices, surveys, labor market, consumer, industry, government and external sectors
  • International sources including OECD, World Bank, IMF, African Development Bank, Oxford Economics & more provide comparable data & forecasts across the continent

Refinitiv® Datastream® has global macroeconomics coverage to analyze virtually any macro environment, and better understand economic cycles to uncover trends and forecast market conditions. With over 14.2 million economic times series map trends, customers can validate ideas and identify opportunities using Refinitiv Datastream. Access its powerful charting tools, 9,000 pre-built chart templates and chart studies for commonly used valuation, performance, and technical and fundamental analysis.

 Refinitiv continually grows available data – the China expansion in 2019 covered a unique combination of economic and financial indicators. Refinitiv plans to expand Southeast Asia covering Thailand, Vietnam, Philippines and Malaysia with delivery expected in 2021. This ensures that Refinitiv will have much needed emerging market economic content.

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Crude Oil

Oil Rises on Drawdown in U.S. Oil Stocks, OPEC Demand Outlook

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Oil prices rose in early trade on Wednesday, adding to overnight gains, after industry data showed U.S. oil inventories declined more than expected and OPEC raised its outlook for oil demand.

Brent crude futures rose 28 cents, or 0.4%, to $63.95 a barrel at 0057 GMT, after climbing 39 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures similarly climbed 28 cents, or 0.5%, to $60.46 a barrel, adding to Tuesday’s rise of 48 cents.

Oil price gains over the past week have been underpinned by signs of a strong economic recovery in China and the United States, but have been capped by concerns over stalled vaccine rollouts worldwide and soaring COVID-19 infections in India and Brazil.

Nevertheless, the Organization of the Petroleum Exporting Countries (OPEC) tweaked up its forecast on Tuesday for world oil demand growth this year, now expecting demand to rise by 5.95 million barrels per day (bpd) in 2021, up by 70,000 bpd from its forecast last month. It is banking on the pandemic to subside and travel curbs to be eased.

“It was a welcome prognosis by the market, which had been fretting about the impact the ongoing pandemic was having on demand,” ANZ Research analysts said in a note.

Further supporting the market on Wednesday, sources said data from the American Petroleum Institute showed crude stocks fell by 3.6 million barrels in the week ended April 9, compared with estimates for a decline of about 2.9 million barrels from analysts polled by Reuters.

Traders are waiting to see if official inventory data from the U.S. Energy Information Administration (EIA) on Wednesday matches that view.

Market gains are being capped on concerns about increased oil production in the United States and rising supply from Iran at a time when OPEC and its allies, together called OPEC+, are set to bring on more supply from May.

“They may have to contend with rising U.S. supply,” ANZ analysts said.

EIA said this week oil output from seven major shale formations is expected to rise by 13,000 bpd in May to 7.61 million bpd.

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