Nigeria: Q1 GDP, MPC Outcomes Determine Stock Market Direction This Week

24 May 2021

The first quarter Gross Domestic Product (GDP) report billed to be released this week by the National Bureau of Statistics (NBS) as well as the outcome of the Monetary Policy Meeting (MPC) at the Central Bank of Nigeria, CBN, today and tomorrow will combine to shape fortunes and trend in the stock market for the next few weeks.

Speaking on the situation, investment analysts, last weekend, said that investors would be on the sidelines today and probably tomorrow, while awaiting the outcome of the two macroeconomic events.

According to analysts at Cowry Asset Management, the domestic bourse would trade sideways as investors stay on the sidelines to digest the first quarter GDP figures.

Corroborating, analysts at Cordros Capital, said: "Investors will be focused on the outcome of the highly anticipated MPC meeting to gain further clarity on the movement of yields in the fixed income (FI) market.

"Consequently, we see more of a choppy theme as cautious trading dominates the market."

Notwithstanding, they advised investors to take positions in only fundamentally justified stocks "as the weak macro story remains a significant headwind for corporate earnings."

Meanwhile, the market reverted to the red zone at the end of last week's trading as the local bourse recorded losses in the first four trading sessions of the week, except for the last trading session when the market closed flat.

Expectedly, the All Share Index (ASI) fell by 3.0 percent to close at 38,324.07 points worsened by sell-off in Airtel Africa Plc (10%), BUA Cement Plc (4.7%), Dangote Sugar Refinery Plc (4.2%), Zenith Bank Plc (3.0%) and Guaranty Trust Bank Plc (2.5%).

Consequently, the Year-to-Date (YTD) loss increased to -4.8%.

Similarly, the market capitalisation of all listed equities fell by 3.0 percent to N19.975 trillion, leading to loss of N614 billion to investors.

Sectoral performance was negative as three of the five sectors recorded losses with the exception of the oil and gas sector, which rose by 7.4 percent.

On the flip side, the industrial goods sector led the losers, falling by 3.3 percent, followed by the banking sector (-1.5%) and the insurance sector (-0.7%). The consumer goods sector, however, closed flat."Activity levels were stronger as trading volume and value rose significantly by 65.4 percent and 69.2 percent to respectively.

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