Outlook: Stock market projected to recover in September

  • Q3 earnings to drive positive vibration
  • Stocks to watch

The stock market closed the month of August on a positive note as the All Share Index and Market Capitalisation both appreciated by 1.74%. Year to date, the market has returned -2.51%.

The effect of second quarter results has reflected on the prices of stocks on the floor of the Nigerian Exchange, although we are yet to see the results of most stocks that pay interim dividend. Zenith Bank and Access Bank has released their results. The market is anticipating results from other banks including GTCO, UBA and Stanbic IBTC.

Experts have projected a better performance for the month of September as other interim dividend paying stocks would likely release their results in the course of the month.

The Managing Director of APT Securities and Funds Limited, Mallam Garba Kurfi opined that the month of September is expected to perform better that the previous months due to obvious reasons. The capital market guru stated thus:

“We are hoping that the month of September will be better than the month of August. This reason is because a lot of this interim dividend that normally come in the month of August did not come. Only Access and Zenith Bank has released their results. GTCO, Stanbic IBTC and UBA are yet to release their results. We are expecting all these results in September and that will trigger the market. There is what we call Bandwagon Effect, which will rob on other stocks. So we are expecting that September will be much better than August.

We are expecting September to likely repeat what happened in September last year. Recall that, by the end of September last year, we almost closed flat. Then by October, November, December, all the gains that we claim to earn in year 2020 happened in the last Quarter. September is likely to close flat, year to date. The total loss year to date is just 2.51%. Hopefully, the market would have fully recovered. The last quarter will be the running quarter before the year end. By then Q3 results will be out, and people will take their position. Based on positive vibration Q3 results would trigger, we should be likely out of the negative. Then the market will forge ahead”.

Commenting on the market performance, the Managing Director of Global View Capital Limited, Aruna Kebira stated thus:

“The Second Quarter results were fine, which supposed to be what would have moved the market well, especially those ones that pay interim dividend. We have seen that of Zenith Bank and Access Bank, but we are waiting for Stanbic, GTCO and UBA. It is of my opinion that by the time they begin to hit the market and analysts sit down look at the results, it will drive their share price upward. Access Bank result was good with earnings per share of N2.45. The fact that they increased their interim dividend from 25 kobo to 30 kobo shows that there is serious growth prospects in Access Bank”.

“Secondly, the Nigerian Exchange Group is going have its Annual General Meeting (AGM) on the 9th of September. One of the ordinary business they would likely discuss is how to move the stock from NASD OTC to the floor of the Nigerian Exchange. Datamax, which is the Registrar to the Nigerian Exchange Group has sent out notice to shareholders to supply their CHN number and the code of their stockbrokers in lieu of the movement of the stock from NASD OTC to the Nigerian Exchange. This shows that we are going to see a move in that stock”.

“By the time the NGX stock is moved from NASD OTC into the Nigerian Stock Exchange, it is going to add to the market capitalisation. And because it’s now going to be available, unlike the way it was trading in NASD OTC. Most deals on the NASD OTC are negotiated deal; but this time around, this will be liquid on the floor. You can’t see that stock trading less than N30. This will impact on the All Share Index and will increase the market capitalisation. So the September can actually come out more positive than we saw in August. September is the last month of the Third Quarter. Though, Q3 results will not be released till October. By then, we will begin to see the fillers from the companies, what they are going to do. People will begin to prorate Q1 and Q2 to determine what Q3 will be. Then, by release of third quarter results, it is almost there. Using prorata at Q3, you can’t miss it. If the stock can move from Q1 to Q2 to Q3, in that progression. By Q3, if you make any prorating, I don’t think you can miss it”.

“I believe by the time we begin to see the fillers, Q3 is going to be better than what we saw in Q2”.

Stocks to Watch

According to Mallam Garba Kurfi and Mr Aruna Kebira, the following are recommended as stocks to watch:

  • Oando: The Company has not released their result for the entire 2019, 2020 and now 2021. We are not waiting for the audited account; having reconciled with SEC, we are expecting them to release the management account which is within their fingertips.
  • PZ promised to release their results in 2 weeks to come because their year-end is in May. The result should have landed by August but they promised it would out by the second week of September.
  • Pharmaceuticals: Fidson Healthcare did well in their Q2 result. May & Baker and Neimeth both did well in their results.
  • Banking Stocks: We have confidence in the banking sector. Even the result of Zenith Bank is somewhat flat, we can see the improvement in Access Bank. We are expecting same to be repeated in UBA, GTCO and Stanbic. First Bank is a stock to watch, though they did not declare interim dividend. We are hoping that they will get out of the wood and start running fast and better.
  • Cement Industry: We have no doubt about the Cement industries. The price of Cement did not go down in the month of August, which normally during raining season the price of cement often crash. This time around, price of cement did not crash. It showed that there is high demand of cement. Therefore, the entire cement industries which include Dangote Cement, BUA Cement and Lafarge Africa are stocks to watch.
  • Telecom: We have seen what they have done in terms of their results; they can repeat it. Therefore Airtel and MTN are the stocks investors should pay attention to.
  • Penny Stocks: Penny stocks are not stocks to write off especially the insurance that demonstrated good performance in the Q2 results.
  • Zenith Bank at N24 is a good buy.
  • GTCO at N27+ or N28+ is a good buy.
  • Okomu Oil at N100 is a good buy
  • Nigerian Breweries at N48 is a good buy
  • BUA Cement at N61.20 is a very good buy
  • Access Bank at N9.20 is a good buy.

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