Bears Pounce on the Capital Market

In line with the equities market correction currently being experienced across the developed markets, the Nigerian All Share index (ASI) extended losses into the second consecutive trading session, down 0.9% to close on Tuesday at 43,877.30 points while YTD return further moderated to 14.7%. Accordingly, investors lost N138.2bn as market capitalization reduced to N15.7tn. Today’s negative performance is largely on account of broad based sell-offs across sectors, although banking stocks – ZENITH (-4.4%) FBNH (-5.2%), UBA (-2.4%) and GUARANTY (-0.7%) were the main drags on performance. However, activity level strengthened as volume and value traded surged 68.0% and 77.5% to 717.2m units and N4.9bn respectively.
 
All Sectors Close in the Red
Sector performance was bearish as all indices closed in the red. The Banking index was the biggest loser, shedding 2.1% following price depreciation in market bellwethers - ZENITH (-4.4%), UBA (-2.4%) and GUARANTY (-0.7%). The Industrial Goods index followed, falling 1.0% owing to losses in WAPCO (-1.1%) and CCNN (-0.8%) while the Insurance index declined 0.5% on the back of sell offs in MANSARD (-3.4%) and CUSTODIAN (-2.1%). Similarly, the Oil & Gas index slid 0.4% as MOBIL (-2.8%) and FORTE (-0.2%) closed lower while the Consumer Goods index shed 0.3% due to profit taking in UNILEVER (-4.4%) and FLOURMILLS (-4.7%).
 
Investor Sentiment Softens
Investor sentiment as measured by market breadth (advance/decline ratio) softened to 0.4x from 0.6x recorded the previous session as 18 stocks advanced against 48 decliners. The top performing stocks today were PRESTIGE (+7.7%), CAVERTON (+6.9%) and AFRINSURE (+5.0%) while HMARKINS (-9.1%), SKYE (-8.9%) and TRANSCORP (-6.8%) were the worst performers. Following sustained sell offs across global equity markets, we anticipate a further decline in the local bourse in trading sessions ahead. As a result, we envisage possible bargain opportunities for investors ahead of the full year earnings season.

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