The Nigerian equities market rebounded despite continued strong volatility, as the ASI closed higher to reverse previous week’s loss.
Overall, the NSE All Share Index improved by 483.24 points or 1.38 per cent week-on-week to 35,488.81 points and the year-to-date return closed higher to 32.05 per cent. Likewise, market capitalisation gained N166 billion to close at N12.234 trillion.
During the week, 128.5 million units of Guaranty Trust Bank were crossed between some offshore funds and local investors 107.5 million units were crossed at N39 and 21 million units were crossed at N38. Also, 57.2 million units of Access Bank were crossed at varying prices averaged at N9.78. Another notable development during the week was the opening for subscription of Union Bank of Nigeria Plc rights issue, wherein the bank intends to raise N49.7 billion with the issuance of 12.1 billion ordinary shares. Investors who had shares in the bank as at August 21, 2017 will be entitled to buy five additional shares for every seven held at N4.10 per share. According to Cordros Capital, given that the bank’s capital adequacy fell below the regulatory threshold of 15 per cent, 80 per cent of the rights proceeds will be used to improve working capital with focus on balance sheet optimization to enhance capital adequacy.
Sectoral performance during the week was mixed with three gainers and two decliners. The Industrial (+2.94% w/w), Banking (+2.39% w/w), and Insurance (+1.41% w/w) indices were the gainers during the week, with 2.94 per cent, 2.39 per cent and 1.41 per cent week-on-week. On the flip side, sell-off persisted in the Consumer Goods index which lost 0.23 per cent and the Oil and Gas index shed 3.05 per cent.
Market breadth remained repressed, with 36 losers and 25 gainers.
Total volume traded rose by 22.26 per cent to 1.09 billion units, with Guaranty Trust Bank, Access Bank and Jaiz Bank accounting for 41.10 per cent of total market volume. In the same vein, total value of trades advanced by 16.21 per cent to N17.86 billion, with Guaranty Trust Bank, Nestle and Zenith Bank accounting for 69.65 per cent of total value.
Outlook for the week
This week, analysts at Crodros Capital expects the volatility in the market to persist with gains outweighing selloffs, albeit marginally, as investors position ahead of third quarter, 2017 earnings season.
“Given the Banking sector has gained 58.60 per cent YtD, we do not expect significant upside from current level, as such the Q3 earnings rally will be driven by investor interest in consumer and industrial goods stocks,” they said.
Afrinvest Limited noted that “Pending the start of third quarter earnings season, market will likely continue to trade sideways. However, with the quarter drawing to a close this week, we expect the local bourse to close positive as fund managers rebalance portfolios.”