Weak Earnings Reports Push Stock Market Lower – Analysts

• Weak Earnings Reports Push Stock Market Lower – Analysts

The weak earnings reports filed with the Nigerian Stock Exchange by some firms last week weighed on the equities market, pushing investors to sell off their shares and take profits, analysts have said.

The market halted its two weeks’ bullish run as the NSE All Share Index declined by 2.51 per cent to settle at 30,636.36 basis points, dragging the year-to-date return to -2.53 per cent.

According to analysts at Meristem Securities Limited, investors took profit off most of the counters following the unimpressive financial scorecards mainly across the consumer goods sector, which contributed to the market’s underwhelming performance.

Investors lost N326bn in January following persistent bearish sentiments.

The market, however, opened on a positive note this month as the ASI gained 0.26 per cent to settle at 30,636.36bps on Friday.

The market capitalisation of equities listed on the NSE increased by N20bn from N11.394tn on Thursday to N11.424tn on Friday.

A total turnover of 1.452 billion shares worth N14.788bn in 19,318 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.807 billion shares valued at N17.232bn that exchanged hands in the previous week in 18,332 deals.

The financial services industry (measured by volume) led the activity chart with 1.204 billion shares valued at N10.500bn traded in 12,671 deals, thus contributing 82.95 per cent and 71 per cent to the total equity turnover volume and value, respectively.

The performance in the banking sector was largely negative as it shed previous gains, declining by 2.47 per cent.

This dragged the year-to-date return into the negative territory at -0.59 per cent. With two gainers and 11 losers, the sector breadth stood at 0.18x.

The insurance sector, after two consecutive weeks of positive performance, closed on a bearish note as it declined by 1.35 per cent to close at 121.98bps.

The conglomerates industry followed with 93.206 million shares worth N138.014m in 916 deals.

The third place was occupied by consumer goods industry with a turnover of 71.404 million shares worth N3.170bn in 2,698 deals.

Trading in the top three equities, namely United Bank for Africa Plc, Zenith Bank Plc and Consolidated Hallmark Insurance Plc, (measured by volume) accounted for 447.620 million shares worth N4.453bn in 3,193 deals, contributing 30.83 per cent and 30.11 per cent to the total equity turnover volume and value, respectively.

There were 16 gainers and 50 losers in the market last week, compared to the 40 gainers and 25 losers recorded in the previous week.

The top five gainers were Associated Bus Company Plc, Mutual Benefits Assurance Plc, Beta Glass Plc, Sterling Bank Plc and UACN Property Development Company Plc, which saw respective gains of 24.14 per cent, 10 per cent, 9.09 per cent, 8.41 per cent and 8.18 per cent.

The top five losers were Consolidated Hallmark Insurance Plc, Niger Insurance Plc, Dangote Flour Mills Plc, Ikeja Hotel Plc and Academy Press Plc, whose respective share prices shed 17.14 per cent, 15.38 per cent, 10.77 per cent, 10.71 per cent and 10 per cent.

Analysts at Vetiva Capital Management Plc said, “In line with trend in the past few weeks, we see the possibility of a recovery in the market this week driven by bargain hunters.

“That said, though we expect cautious sentiment to remain prevalent ahead of the elections, we foresee select fund managers taking positions in beaten down stocks as the elections draw closer.”