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Stock Market’s ‘Great Rotation’ to Catch Out investors, Warns DeVere Boss

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Arab stock

The growing noise about the rotation from growth to value stocks as a result of the optimistic vaccine news is “misguided” and could “catch-out investors,” warns the CEO of one of the world’s largest independent financial advisory and fintech organisations.

The stark warning from Nigel Green, chief executive and founder of deVere Group, which has $12bn under advisement, comes following several key breakthroughs in the fight against Covid-19 causing an ‘unprecedented’ rotation in stocks.

Market rotation is the counter movement by traders from one equity class or sector into another.

Mr Green warns: “Optimism driven by progress towards a Covid-19 vaccine has prompted many investors around the world to ditch several of 2020’s high-flying stocks – the ones that benefitted from the impact of the pandemic – and buy ones that were beaten down by coronavirus.

“In the last few days, there’s been a historical, violent rotation from growth and momentum stocks, like stay-at-home tech, to value funds, including financials and industrials, as a result of the positive vaccine news.

He continues: “Hopes for a potential vaccine are legitimate and the developments are, without question, positive news for humanity.

“However, The Great Rotation could be misguided and could catch-out investors.

“They might be looking ahead to the post-pandemic era with a virus-free economy, but the world, the global economy, how we live, do business and interact remains fundamentally changed.

“It is doubtful the world will go back exactly to how it was pre-Covid – there are many aspects of the ‘new normal’ which people like and support. As such, some of the major shifts are unlikely to be reversed.

“The remote working phenomenon is one example. Even if 20% of office workers return to the office full time, the change in working patterns is monumental.

“Other examples include business travel being replaced with videoconferencing, and online retail – people have fallen in love with it. Will they all suddenly go back to the stores? Then there’s the use of apps for everyday tasks such as banking, also for healthcare and medical analysis, amongst many other things.

“In many ways, Covid-19 simply accelerated the growing trend that existed before towards consumer convenience, for 24/7 access and on-demand.

“Therefore, dumping stocks that support these major societal and economic seismic shifts in favour of so-called recovery stocks might catch investors off guard.”

The deVere CEO also highlights that the roll-out of a mass global vaccination agenda will be a lengthy process and will face an uphill logistical struggle, plus there are the “vaccine sceptic concerns to address.”

He concludes: “The best way for investors to position themselves for the opportunities and to mitigate risks is to have a broad spread of investments, and not to try to second guess the market.”

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.

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Insider Dealing: Flour Mills MD Invest N91.642 Million in Flour Mills

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flour mills posts 184% increase in PAT

Following the purchase of 1.95 million shares in Flour Mills of Nigeria a few days ago, the Group Managing Director, Paul Miyonmide Gbededo, has purchased another 1.34 million shares at N27.75k per share.

The company stated in a disclosure form released through the Nigerian Stock Exchange (NSE).

Mr. Gbededo bought an additional 1,336,028 shares valued at N37,074,777 on November 19, 2020 at the Nigerian Stock Exchange (NSE) in Lagos. Meaning, Gbededo invested an additional N37,074,777 into Flour Mills in what could be said as a show of confidence in the company’s future.

This brings the Managing Director’s total purchase in November to 3,284,867 shares at a combined value of N91,642,269. See the details below.

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Insider Dealing: Fidelity Bank’s GM Purchases 1 Million Shares in the Bank

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Fidelity Bank

The General Manager and Regional Bank Head, Fidelity Bank Plc, Mr. Kenneth Opara, has purchased 1 million shares of Fidelity Bank Plc.

The bank stated in a disclosure statement forwarded to the Nigerian Stock Exchange (NSE) on Friday.

Opara carried out the purchase in two different transactions on November 25, 2020 at the Nigerian Stock Exchange trading flour in Lagos, Nigeria.

The General Manager bought 6,000 shares at N2.78 per unit and another 994,000 at N2.79 per share. Bringing total purchase to 1 million shares at an average share price of N2.78. See the details below.

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Bank Stocks Top Charts Amid Strong Third Quarter Performance

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Zenith Bank

Bank stocks top both gainers’ and top traded stocks’ charts on Tuesday as investors at the Nigerian Stock Exchange continues to increase their holdings of banks’ stocks amid strong third-quarter financial results.

Zenith Bank led the most traded stocks for a second consecutive day on Tuesday following a declaration of  N509 billion gross earnings and N177 billion profit after tax in the first nine months of the year.

Investors traded 71,933,841 shares of Zenith Bank valued at N1,730,151,404.20 during the trading hours of Tuesday.

Transcorp, the only non-bank stock on the top five trades, followed Zenith Bank with 37,172,526 shares worth N32,853,263.27.

Guaranty Trust Bank Plc, Access Bank and United Bank for Africa (UBA) exchanged 30,003,182 units, 29,549,235 units and 29,332,033 units estimated at N1,022,126,997.60, N243,311,726.70 and N236,303,261.20, respectively.

Investors exchanged a total of 365.414 million shares valued at N4.692 billion in 6,325 deals on Tuesday to return the bourse to the green zone after two days of consecutive declines.

The Nigerian Stock Exchange market capitalisation rose by N114 billion from N17.829 trillion it closed on Monday to N17.943 trillion on Tuesday. While the NSE All-Share Index gained 220.82 index points or 0.06 percent to 34,349.56 index points it settled on Tuesday, up from 34,119.74 index points on Monday.

Stanbic IBTC Bank led gainers with N2.8 or 7.08 percent gain to finish the day at N42.35 per share. See the details below.

Top Trades 

Symbols Volume Value
ZENITHBANK 71,933,841 N1,730,151,404.20
TRANSCORP 37,172,526 N32,853,263.27
GUARANTY 30,003,182 N1,022,126,997.60
ACCESS 29,549,235 N243,311,726.70
UBA 29,332,033 N236,303,261.20

Top Gainers

Symbols Last Close Current Change %Change
STANBIC N39.55 N42.35 2.8 7.08%
UBA N7.7 N8.2 0.5 6.49%
ACCESS N7.9 N8.35 0.45 5.70%
FBNH N6.7 N7.15 0.45 6.72%
UBN N5.5 N5.9 0.4 7.27%

Top Losers

Symbols Last Close Current Change %Change
JBERGER N19 N17.3 -1.7 -8.95%
FIDSON N5.4 N4.87 -0.53 -9.81%
GUINNESS N18 N17.5 -0.5 -2.78%
ETERNA N4.61 N4.15 -0.46 -9.98%
UACN N7.95 N7.65 -0.3 -3.77%

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