Economists and investment researchers at Bancorp Securities Limited, a leading investment consulting firm in Nigeria, on Monday said they expected trading in the Nigerian Exchange (NGX) to remain cautious and stock-specific this week following the broad-based weakness recorded in the previous week.
In the firm’s ‘Weekly Stock Recommendation for Mon 17th August- Friday August 21st’ sent to our correspondent, the analysts projected that “investor positioning is likely to be influenced by the July inflation release and remaining corporate earnings, while the recent market correction could create entry opportunities in fundamentally strong stocks.
“However, weak market breadth and sustained pressure across key sectors suggest that a broad-based market recovery may remain limited in the immediate term”, they added.
The experts recalled that Nigeria’s macroeconomic environment last week was characterised by further reforms across the money and capital markets, alongside renewed pressure on crude oil production.
- Advertisement -
In addition, they noted that the Central Bank of Nigeria (CBN) broadened access to Open Market Operations (OMO) and restored tenored repo transactions, while the SEC clarified the treatment of foreign investors under the T+1 settlement framework.
The experts reported that, however, the decline in crude oil production in July highlights continued risks to fiscal revenues and foreign exchange earnings.
On the capital market performance in the week under review, the economists noted that the Nigerian equities market reversed the previous week’s marginal gain, closing lower as broad-based selling pressure across major sectors weighed on the benchmark index.
The experts recalled: “Unlike the previous week, when Banking provided support to the broader market, all five major sector indices closed in negative territory, with Consumer Goods recording the steepest decline.
“Consequently, the NGX All-Share Index declined by 1.20% week-on-week to close at 242,619.20 points, reversing the previous week’s 0.12% gain, while market capitalisation declined by 1.19% to NGN156.62 trillion.
“Trading activity strengthened significantly, with volume increasing by 126.76% to 12.15 billion shares and transaction value rising by 26.61% to NGN176.06 billion, while total deals declined by 14.41% to 224,146.
“The sharp increase in volume, however, did not represent broad-based improvement in market participation. The Financial Services sector accounted for 92.25% of total market volume and 50.55% of transaction value, while trading in Fortis Global Insurance, Cornerstone Insurance, and Consolidated Hallmark Holdings alone accounted for 78.07% of total market volume, indicating significant concentration in a few financial services counters”, they added.
