NGX weekly gains surges amid escalating M/East tension
Amidst escalating geopolitical tension in the Middle East, the Nigerian Exchange (NGX) market appears unburdened as bulls inspired best week in nine years, with the All Share Index (ASI) appreciating 13.3 per cent.
As a result, market capitalisation improved N6.3 trillion to N51.7 trillion while Year-to-Date (YTD) advanced to 26.4 per cent (previously 11.1%).
Activity level declined w/w as average volume and value traded tempered 10.9 per cent and 26.0 per cent to 1.0 billion units and N13.1 billion respectively. TRANSCORP (362.9bn units), JAIZBANK (338.8bn units), and AIICO (251.9 billion units) were the top traded stocks by volume for the week while TRANSCORP (N6.3bn), NASCON (N5.2bn), and ZENITH (N4.8 bn) led by value.
John Ode, a stockbroker in Lagos said he is at lost what is driving the gains.
“There must be reasons why demand can exceed supply, but, I cannot find any?”
He explained that, had the financial results be out t and rewarding, he understand.
Across our coverage sectors, weekly performance was positive as five indices gained while the Banking index lost 0.1% per cent.
Leading the gainers, the Industrial Goods and Insurance indices rose 46.9 per cent and 14.9 per cent w/w following strong upswing in DANGCEM (+53.9 per cent), BUACEMENT (+45.8 per cent), and NEM (+39.1%). Price appreciation in SEPLAT (+10.0%), ETERNA (+38.3%), and DANGSUGAR (+17.3%) pushed the Oil & Gas and Consumer Goods indices up 8.8 per cent and 8.2 per cent sequentially. Also, the AFR-ICT index rose 1.1 per cent week/week (w/w), buoyed by price rally in MTNN (+2.5%).
Investor sentiment, as measured by market breadth, strengthened to 1.1x from 0.9x in the prior week as 79 stocks gained, 16 lost while 57 were unchanged. The top performing stocks for the week were DANGCEM (+53.9%), HONYFLOU (+50.8%), and MAYBAKER (+50.5%) while ROYALEX (-22.4%), IKEJAHOT (-10.6%), and LINKASS (-8.2%) were the top underperforming stocks.
“Next week, we expect the positive sentiment to linger albeit at a softer price, moderated by profit-booking. Hence, we advise cautious entry and equity selection based on fundamentals”, said analysts at Afrinvest.
But the scenario is different at the global market.
According to Afrinvest, disinflation twist, escalating tension fueled a bloodbath.
Last week, market performance was shaped by escalating geopolitical tension in the Middle East, mixed earnings results, and uncertainty about the anticipated dovish stance by the US Fed, following the recent disappointing inflation data – y/y inflation reading spiked for the first time in three months to 3.4 per cent from 3.1 per cent. Overall, the MSCI World index declined 0.4 per cent w/w. The US market closed the week mixed as the S&P 500 lost 0.1 per cent, while the Tech-heavy NASDAQ index gained 1.0 per cent w/w following optimism about growth in the semiconductor sector amid favourable demand outlook. Mirroring global anxieties, in Europe, the UK’s FTSE index recorded a weekly loss of 1.9 per cent as fears of delayed rate cuts overshadowed sentiments. Likewise, France’s CAC 40 index saw a decline of 1.2% due to a trifecta of losses in construction, retail, and chemicals. In Germany, the Petra DAX index shed 0.9 per cent w/w due to negative reaction to disappointing Gross Domestic Product (GDP) performance in the fourth quarter (down 0.3%).
