Investment researchers at Bancorp Securities Limited, a leading investment research and consulting firm in Nigeria, have projected a cautious trading in banking sector stocks in the Nigerian Exchange (NGX), which would more likely be defined by profit taking activities
In the firm’s ‘Weekly Stock Recommendation: Dec 11- Dec 15’ report circulated to our correspondent on Monday the experts linked their projection to the calendar season and its effect on the bourse.
The analysts recalled that in the previous week, the bourse returned + 0.17% w/w (+39.59% YTD) as the NGXASI closed at 71,541.74 points at the end of the week as the equities market activity was characterized predominantly by the Banking sector, although the total volume declined by 4.13% in the course of the week, whilst traded value jumped 18.02% in the same timeframe.
According to the report, the major activities that underlined the performance of the NGXASI, include but not limited to the heightened investor activity in financial services stock, driven significantly by market sentiments around Banking and Insurance stocks, with Tier 1 banks and fundamentally viable insurance stocks being the outlier with the financial service stocks topping the volume charts, with seven stocks in that category, accounting for 42.83% of the total weekly volume. The financial stocks include, UNIVINSURE, UBA, GTCO, VERITASKAP, amongst others.
Other drivers of the performance of the market were the sustained performance of MULTIVERSE on the top price gainers chart in recent weeks, returning a total of 57.02% after trading 4.69 million units, followed closely by THOMASWY (32.80%), INFINITY (32.09%), etc, and the fundamental nature of the top gainers in the just concluded week, underscores the capital gains potential in less expensive, growth stocks.
Specifically, the report reflected that the total volume traded on these categories accounted for a meagre 8.68% of the total volume traded during the week, save for the performance of ACCESSCORP, except which the total volume of price gainers declined further to 2.91% of total volume traded.
In addition, the analysts reported that three indexes under the firm’s coverage closed – Industrial goods index (-3.03%). Insurance index (-1.44%) and the Oil & Gas index (-0.58%), whilst the 6.08% premium on the banking index and 0.21% growth on the consumer goods index.
Meanwhile, they also noted that the latest report from the National Bureau of Statistics (NBS) showed that export earnings improved in Q3 2023, as Nigeria recorded an excess of NGN 10.28 trillion during the period, representing a 60.76% growth q/q, adding that the trend is precipitated by the 82.15% contribution of crude oil exports.
The experts clarified: “This record shows a resuscitation of economic activity, in line with perceived interests in the Nigerian economy. On a year-to-date basis, the nation’s trade surplus has exceeded NGN 3.48 trillion cumulatively, representing a 22.22% decline from its previous peak of NGN 4.46 trillion in the same period in 2018.
“Summarily, the increasing trade surplus is advantageous to the domestic economy, but sustaining it is key, reason being the dominance of crude oil exports in its composition, which creates a high volatility risk when international oil prices are on decline.
“Fundamentally, enhancing economic output, save for the overwhelming dependence on crude oil revenue, has the potential to redirect the imbalances and diseconomies to scale in the Nigerian context”, the experts added.
