Ruth Ibikunle
The Nigerian stock market closed on a positive note last week with 1.19% growth, week on week. Year to date the market has returned 4.16% with the All Share Index and Market capitalization at 44,492.73 points and N24.234 trillion respectively.
In a stock market review with Mr Gilbert Ayoola, the seasoned capital market expert gave in-depth insight on the current market mood, possibilities and recommendations on profitable investment decisions.
Excerpts:
• The stock market closed on a positive note last week with 1.19% growth week on week. What could be responsible for this?
Like it is often said that the stock market is driven on the background of information, be it either positive or negative. We saw the NGX closing strong based on positive news that filtered into the market, leading to investors having renewed buying interest in the shares of Nigerian Breweries, MTN, and FBNH shares while their respective share prices increased by 10.00%, 4.79%, and 3.77%, respectively.
• What are the possibilities for the new week?
The possibilities are still high, knowing that some of the stocks still pose the potential to move their prices higher on the account of buying demands against available supply by investors taking position, following the Q3 results of these companies in anticipation for the Q4 release performance, and the final year end results, knowing that major company’s calendar year ends December 31.
• AXA Mansard led other gainers with 15.69% growth last week, leading other gainers. What is driving the price up? Is it a good BUY at N1.77?
If compared on a Q3 to Q3 year on year basis, the company in its Q3 2022 had declined due to operational challenges with 55.04% drop in profit for the nine months to N1.711 billion from N3.806 billion in 2021.
Not forgetting that it did a share restructuring, reason for the massive appreciation in price at N2, also a current declaration of 6kobo dividend to its existing shareholders. When compared along with its peers, any discerning investor watching to invest in insurance stock is a good BUY looking at current price.
• Union Bank, GTCO, Nigerian Breweries and Unilever emerged among top 5 gainers. What is driving the prices of these stocks?
Many of these stocks have one or two activities or information surrounding them amidst investors’ sentiment playing a part. Union Bank presently is undertaking a Mandatory Takeover Offer (MTO) at price of N7 per ordinary share from its new core investor to buy in addition to 6.46% stake of it holdings to assume 100% takeover of the company while activity in GTCO is likely due to its low price compared to its 52-week high of N31.30 compared to its closing price of N16.80 last week.
For Nigerian Breweries, it is due to the recent declaration of 1 for 4 bonus shared out from its proposed cancellation of unissued shares in line with CAC guideline approval. While for Unilever, its basically drive on sentiment of shareholders on renewed interest looking at the current price.
• Is the proposed bonus of 1 for 4 in Nigerian Breweries capable of driving the share price? Is Nigerian Breweries a good BUY?
Considering price of the stock from previous 52-week high at N78.50, the stock is currently cheap coupled with the company’s announcement of a bonus of 1 for 4 issued shares to its existing shareholders. This recent news has delighted many investor thereby creating renewed interest within stakeholders of the company demanding and acquiring more of its shares, leading to new price movement over demand with no available seller willing to depose driving the price offer to a new time high before close of date for markdown slated for Tuesday, December 6 for the bonus.
• Guinness significantly dropped by 18.96% to N60.50. How low is Guinness going to? What should investors in Guinness do?
The price of the stock will significantly be impacted and continue to oscillate on the basis of investor’s sentiment.
For any investor wishing or interested in the brewery company like Guinness, this is the time to increase their buying stake into the company waiting for a new price surge on account of better operational performance towards increase earnings.
• What are the possibilities in Fidson, Lafarge Africa, FBNH, Zenith and Access Bank?
These companies are good to go judging from their Q3, 2022 results and performances. Though their prices may continue to move forward and backward until it gets to a relatively price stability due to activities of profit-taking. If checked, these companies are among the top leads and players in their various sectors. On this account you’re sure of end of year dividend payment.
• Nigerian inflation rate grew to 21.09% in October 2022, according to NBS. How will this impact the capital market?
Nigeria’s inflation rate, which has surged to its highest level in more than 16 years is putting a damper on stock returns as interest rate hikes brightens prospects of the fixed income market. Again, we begin to see a smart swift and gradually slow down knowing that this has also heightened the numbers in the consumer price index figure.
Nigeria’s high-interest rate environment aimed at reducing inflation continues to make fixed income securities more attractive at the expense of stocks while the International Monetary Fund(IMF) also signaling the CBN on possible impact of this among proposed redesign of some of the country’s major currencies.
• What are the stocks to watch?
Investor should continue to look for companies with good performance records on the background of better dividend payout and price appreciation like Zenith Bank, MTN, GTCO, AccessCorp, United Capital, Fidelity bank, Flour Mills of Nigeria, Mansard, Transcorp Incorporated, Vitafoam, and many others.