Ruth Ibikunle
The Nigerian stock market on Monday closed on a positive note with 0.26% growth. Year to date, the market has returned 30.88% with the All Share Index and Market Capitalisation at 97,863.34 points and N55.359 trillion.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
• The stock market last week closed lower by 0.52%. It however closed positive on Monday with 0.26% growth. What is the outlook for the new week?
The stock market is in its seasonal behavior and we may not see anything significant in the green during this period.
The spate at which inflation is rising and the close marking of the CBN via a hike in interest rate is not coming to an end soon.
Consequently, we shall see mixed market closings from day to day and week to week from this time forth.
What the CBN needs to start tinkering with the rates downward is not yet on the horizon, therefore, the market would continue to close based on its mood daily
• What is driving the growth in Fidelity, UBA, and Access?
Any growth you see in the price of any stock now is a temporal reversal of the price, especially when the market has considered that the price at which such stock price had been driven is quite unfair.
The growth you may be seeing in the prices of Access, Fidelity, and UBA is premised on the performance of their Q12024 earnings. But since nothing tangible is expected by the market at the end of this performance, the growth and increase in the prices would be ephemeral.
• CBN has increased the Monetary Policy Rate to 26.25%. How will this impact the stock market?
The CBN in the last MPC meeting increased the headline interest rate from 24.75% to 26.25%.
This is still in tandem to stem and compact inflation. A cursory look at the inflation figure revealed that food inflation had remained the driving force. If nothing is done about the food supply, there will be little or nothing the monetary policies can achieve this time.
The increase in the rate would also make the participant in the money market adjust their rates upwards.
The act will discourage borrowing and is to encourage savings. But the money market instruments would now bring about a better yield than that of the capital market.
Remember that investment in the capital market is risky and investors that come to the market have always traded risk for reward, but now that the reward is better even in the market that is considered less risky than the capital market, you do not need any prophet to preach to them where the next investment destination is.
The mass exodus from the capital market normally leads to a depressed market both in prices and the mood.
The more the CBN increases the MPR, the more discerning investors japa to the money market
• How attractive is Transcorp at N10.50
Transcorp at 10.50 is good to go because its performance in Q22024 might exceed the market expectation. After all, dividend payments from its subsidiary would be recognised in the quarter and the company is not doing badly.
•What are the stocks to watch?
Japaul Gold, Transcorp, UBA, Zenith, Access, NACHO, and a host of others