Nigeria: Equities - Weak Outlook As Year Ends

30 December 2019

After closing the week on negative note, investment analysts have projected that the market would end the year in a lacklustre level given the risk-off sentiment prevailing in the market.

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The local bourse, which has been moving in opposite direction to other global markets, recorded losses in two of the three trading sessions in the festive shortened week with the All Share Index, ASI, shedding 0.41 percent to settle at 26,416.48 points from 26,526.35 points in the previous week.

Also, investors' wealth declined by 0.40 percent after the equities capitalisation fell by N51 billion to close at N12.753 trillion from N12.804 trillion.

Meanwhile, global equity markets sustained the positive run from the previous week as investors continue to focus on the prospects of the completion of phase I trade deal between the US and China. According to analysts, Santa Claus rally also supported global equities as fund managers adjust year-end positions.

Consequently, the US stocks (DJIA rose 0.6%; S&P: +0.6%), European shares (Euro Stoxx: +0.2%; FTSE 100: +0.9%), and Asia stocks (Nikkei 225: +0.1%; CSI 300: +0.1%). The positive global sentiments for risk assets extended to the emerging and frontier markets with the MSCI Emerging Market Index rising 0.4 percent and MSCI Frontier Market Index went up by 0.5 percent.

"We see the level of activity and volatility being sustained over the final days of the year, with some pockets of gains expected, as fund and portfolio managers realign portfolios prior to the start of 2020," said analysts at Cordros Capital in their review of activities in the local bourse. A review of sectoral performances showed that the banking and the industrial goods sectors recorded 0.26 percent and 0.31 percent decline respectively, following selloffs in Guaranty Trust Bank (-2.0%) and Cement Company of Northern Nigeria (-3.0%).

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Conversely, consumer goods (+1.3%), Insurance (+1.0%), and Oil & Gas (- 0.7%) closed higher, driven by gains in Nestle Nigeria Plc (+10.0%), NEM Insurance Plc (+2.2%) and Oando Plc (+6.76%).

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