Profit taking by some investors moderated the growth of the Nigerian stock market last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) appreciated by 0.69 per cent to close at 29,618.52.
The gain was lower than the record 9.1 per cent posted the previous week, which was the highest weekly growth in two years. Market capitalisation added N81.8 billion to close at N15.256 trillion.
Sustained investor confidence had two weeks ago lifted the market as appetite for risk assets increased significantly following low valuations of equities. Against the backdrop of the increased demand the year-to-date growth hit to 9.6 per cent penultimate week.
However, the market witnessed a moderation last week as investors booked in part of gains already recorded on the back of an eight-day rally.
However, gains posted by bellwether stocks such as Dangote Cement Plc, MTN Nigeria Communications Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc boosted the YTD appreciation to hit 10.3 per cent.
In terms of sectoral performance, the NSE Banking Index gained most, chalking up 2.3 per cent, trailed by the NSE Oil & Gas Index which posted a growth of 0.6 per cent. However, the NSE Industrial Goods Index shed 6.3 per cent, while the NSE Insurance Index and NSE Consumer Goods Index fell 2.6 per cent and 2.1 per cent respectively.
Although some level of profit taking is expected this week, even as analysts anticipate market rally as well.
"Looking ahead, while we expect profit-taking to continue in the coming(this) week, we still see significant legroom for a further rally as the elevated maturities from fixed income instruments hunt for investment vehicles.
"Nonetheless, we advise investors to cherry-pick fundamentally sound stocks," analysts at Cordros Capital said.
The Head, Research & Strategy, Cordros Securities, Mr. Jolomi Odonghanro, last week rated the equities market as a good investment option for 2020, explaining that significant liquidity would be coming into the market because of favourable monetary policies.
According to Odonghanro, the equities market would continue to witness a bullish performance for most part of the first quarter of 2020, noting that it is the best channel investors should focus on for now.
He explained that the estimated N2.73 trillion of non-bank corporate and individual open market operations (OMO) assets maturing over 2020 will be in search of positive inflation-adjusted returns.
"This presents a positive case for equities as market selloffs in recent years have provided an opportunity for dividend yield investment strategy. Despite increased risk in the banking sector, there remains immense value and the fundamentals of the banking sector remain compelling even as market sentiments have kept prices low," he said.
Already, the Chief Executive Officer of NSE, Mr. Oscar Onyema, has expressed optimism that the stock market would record a positive performance this year.
He said the market has bright prospects, stressing that market sentiments may be buoyed by a steady and stable recovery in the domestic economy, alongside continued sustainability in monetary policy.
"The signing into law of Nigeria's Finance Bill 2019 and implementation of the 2020 budget may have a positive impact on companies' earnings as well as consumer spending. Accordingly, the exchange will continue to advocate for business-friendly economic environment, working in conjunction with both the public and private sectors," he said.
The NSE boss noted that in their aspiration to become a more agile and demutualised exchange, and pursuant to the Securities and Exchange Commission (SEC)'s 'No Objection', they will proceed to next steps which include seeking formal approval from their members on their demutualisation scheme.
"We are committed to continually provide clarity on the demutualisation process to our various stakeholders through regular engagements. While keeping an eye on the strategic intent of the exchange post demutualisation, we will continue to leverage our vast network of stakeholders, in addition to developing new strategic partnerships with the goal of delivering better products and services to our customers. As African Champions, we will maintain momentum in executing the NSE's 2018 - 2021 Corporate Strategy in our efforts to elevate the prominence of Africa's global financial markets," he said.
Speaking on some of factors that will drive investors' sentiments in 2020, Onyema said a stable polity and business environment would be key to Nigeria's success.
Onyema said: "Enhanced focus on infrastructure renaissance and promotion of laws that will support the business environment will be key to Nigeria's success in 2020. Nigeria moved 15 places from 146th to 131st in the latest World Bank ease of doing business report as such the country has been tagged as one of the most improved economies in the world in terms of doing business reforms. These are positive indicators that will drive investors' sentiment in 2020."
Investors traded 2.087 billion shares worth N26.470 billion in 24,262 deals last week compared with 2.683 billion shares valued at N32.646 billion that were traded in 30,956 deals two weeks ago. The Financial Services industry remained the most traded, recording 1.117 billion shares valued at N13.693 billion traded in 13,739 deals, thus contributing 53.5 per cent and 51.73 per cent to the total equity turnover volume and value respectively.
The Healthcare industry followed with 521.893 million shares worth N182.965 million in 420 deals, while the third place was occupied by the Conglomerates industry, with a turnover of 123.606 million shares worth N573.907 million in 1,164 deals.
Trading in the top three equities namely: Union Diagnostic & Clinical Services Plc, Access Bank Plc and Zenith Bank Plc, accounted for 877.992 million shares worth N8.399 billion in 5,251 deals, contributing 42.1 per cent and 31.7 per cent to the total equity turnover volume and value respectively.
Top price gainers and losers
Meanwhile, 21 equities appreciated in price during the week, lower than 51 equities in the previous week while 42 equities depreciated in price, higher than 20 equities in the previous week.
Forte Oil Plc led the price gainers with 21.8 percent, trailed by Beta Glass Plc with 18.7 per cent. Glaxo Smithkline Consumer Nigeria Plc chalked up 13.2 per cent, while MTN Nigeria Communications Plc garnered 9.1 per cent.
C & I Leasing Plc and Ekocorp Plc appreciated by 8.8 per cent and 7.2 per cent in that order, just as GTBank Plc and UBA added 4.8 per cent and 4.7 per cent respectively. Trans-nationwide Express Plc gained 4.6 per cent just as UAC of Nigeria Plc appreciated 4.3 per cent.
Conversely, Consolidated Hallmark Insurance Plc led the price losers with 14.2 per cent trailed by NEM Insurance Plc 13.6 per cent, while BAU Cement Plc shed 12.2 per cent.
Tourist Company of Nigeria Plc and BOC Gases Plc went down by 10 per cent apiece, while Caverton Offshore Support Group Plc declined by 9.9 per cent.
Other top price losers included: Sovereign Trust Insurance Plc (9.0 per cent); Golden Guinea Breweries Plc (8.9 per cent); Neimeth International Pharmaceuticals Plc (8.9 per cent).