18 June 2018

Nigeria: Equities Market Set to Continue Upward Trend - Analysts

INVESTMENT analysts have predicted that equities market will sustain the upward momentum recorded in the last two week as investors continue to take advantage of low prices of value stocks.

According to them, the newly approved multi-fund investment structure by the Pension Commission, PenCom, that requires Pension Fund Administrators, PFAs, to invest more in equities as well as positive macro-economic fundamentals, would provide a boost to the expected rally.

Gains were sustained on the equities market for two consecutive weeks last week, with the All Share Index, ASI, rising by 0.67 percent at the close of trading on Thursday to 38,928.02 points amidst sessions of mixed trading.

Consequently, the year-to-date and month-to-date returns remained positive at 1.79 percent and 2.16 percent respectively.

Also, equities capitalisation rose by N94 billion or 0.67 percent to N14.102 trillion from N14.008 trillion in the previous week.

According to analysts at Cowry Asset Management, trading in the equities market will close the week in the green territory despite the U.S Federal Reserve Bank's rate hike. They averred that the PFAs are expected to cushion the effect of anticipated outflows given the recently reviewed policy by PenCom.

Also analysts at Cordros Capital opined that gains are likely to be sustained in the domestic market, amidst still-supportive macroeconomic fundamentals.

In their research report for the week, analysts at both Afrinvest Securities and Vetiva Capital Management, projected a rebound in activity following two days of successive losses in the market at the last two trading days last week.

They stated that the rebound is more likely following bargain hunting activities by value investors.

Meanwhile, analysis of transaction in the market for the preceding week showed that performance across sectors was mixed as three of five advanced during the week. The oil and gas sector was the top performer, up 3.8 percent on the back of gain in 11 Plc (formerly Mobil Oil Nigeria Plc), which rose by10.2 percent and Seplat Petroleum and Development Company that advanced by 2.7 percent. The insurance sector trailed, closing 2.7 percent higher as a result of buy interest in Equity Assurance (20%), AxaMansard Insurance (6%) and NEM Insurance (6%).

The banking sector appreciated by 0.3 percent on account of 10.7 percent and 0.8 percent increase in Union Bank of Nigeria Plc and Ecobank Transnational Incorporated Plc respectively.

On the other hand, the consumer goods and industrial goods sectors closed in the red, down 0.8 percent and 0.1 percent respectively, dragged by losses in Nigerian Breweries (-6.8%), International Breweries (-5.3%), Lafarge Africa (-1.8%), Cement Company of Northern Nigeria, CCNN, (1.8%) and Dangote Cement (-0.1%).

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