Stock Market Maintains Positive Trend Ahead of 2022 Corporate Earnings

Kayode Tokede

For the second consecutive week, the stock market segment of the Nigerian Exchange Limited (NGX) maintained its positive growth  on the back of surge buying interest from investors ahead of 2022 corporate earnings and actions from listed companies.

The NGX All-Share Index ended the week 0.16 per cent week-on-week (W-o-W) higher to close at 52,594.68 basis points from 52,512.48 basis points it opened for trading.

Also, market capitalization rose by N45 billion W-o-W to close at N28.647 trillion from N28.602trillion it closed for trading last week.

Performance across sectors was mixed as the NGX Insurance index recorded a weekly gain of 1.8 per cent, while NGX Oil and Gas index rose by 0.4 per cent. On the other hand, the NGX Banking index declined by 2.6 per cent W-o-W.

NGX Industrial Goods index went down by 1.1 per cent, while NGX Consumer Goods index shed 0.4 per cent for the week.

The market breadth for the week was positive as 39 equities appreciated in price, 30 equities depreciated in price, while 88 equities remained unchanged. International Energy Insurance led the gainers table by 28.95 per cent to close at 49 kobo, per share. MRS Oil Nigeria followed with a gain of 13.48 per cent to close at N16.00, while Nigerian Aviation Handling Company (NAHCO) went up by 12.86 per cent to close to N7.90, per share.

On the other side, Livestock Feeds led the decliners table by 13.85 per cent to close at N1.12, per share. C&I Leasing followed with a loss of 10.00 per cent to close at N3.15, while UPDC declined by 9.62 per cent to close at 94 kobo, per share.

Overall, a total turnover of 1.241 billion shares worth N15.668 billion in 18,560 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.286 billion shares valued at N29.634 billion that exchanged hands previous week in 19,816 deals.

According to the NGX weekly report, the Financial Services Industry (measured by volume) led the activity chart with 1.010 billion shares valued at N5.924 billion traded in 9,165 deals; contributing 81.37 per cent and 37.81 per cent to the total equity turnover volume and value respectively.

“The Conglomerates Industry followed with 46.761 million shares worth N112.918 million in 641 deals, while the Consumer Goods Industry pulled a turnover of 42.121 million shares worth N2.134 billion in 2,886 deals.

“Trading in the top three equities; Veritas Kapital Assurance, Sterling Bank and Guaranty Trust Holding Company (GTCO) accounted for 605.879 million shares worth N2.120 billion in 1,631 deals, contributing 48.82 per cent and 13.53 per cent to the total equity turnover volume and value respectively,” the report added.

Meanwhile, stock market aactivities for this week will be focused on the outcome of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN).

Members of the MPOC will meet on Monday and Tuesday for its first assembly in 2023 to assess the existing guiding economic principles amid drop in inflation rate in December 2022.

Looking ahead into the new week, analysts at Cowry Assets Management Limited said the positive sentiment is expected to continue as investors seek a better position ahead of the MPC meeting as well as the churning out of fourth and full year earnings by listed corporates, saying “however, we continue to advise investors to trade on companies’ stocks with sound fundamentals.”

Aanalysts at Cordros Securities Limited, said, “we believe investors will focus on the outcome of the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the Fixed Income (FI) market.

“If the MPC increases and there is a passthrough impact on yields in the FI market, there could be realignment of investments between markets that would pressure the performance of the equities market.

“As a result, we envisage a cautious trading from domestic investors over the next week, and the short-term. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the unimpressive macro environment remains a significant headwind for corporate earnings.”