Stock Market Review: April 13, 2023

Ruth Ibikunle

The Nigerian stock market on Wednesday closed flat with the All Share Index and Market Capitalization at 51,953.41 points and N28.300 trillion.

In a stock market review with Mr. Gilbert Ayoola, a capital market expert, the following were discussed:

Excerpts:

The market on Wednesday closed flat. What should we expect in the coming days of this week?

The equities market experienced a draggy movement yesterday, having mixed reaction as investors remain optimistic after the Easter celebration closing the market positively flat as the All Share Index (ASI) stood at 00% to close at 51, 953 basis points.

Subsequently, the market may possibly continue in this pattern in days and weeks to come as investors await the release of Q1 2023 earnings unaudited financial results from some of the quoted companies. as the market is continuously sustained and rides on the steam of 2022 earnings results and declaration of dividends by some of these companies via the release of their corporate action.

Cadbury declared 40 Kobo dividends to shareholders for 2022 year end. How attractive is the stock at the current price?

The activities in the trading of Cadbury are due to its improved earnings and sustained growth in the bottom to top line increasing revenue.

The company was able to record an increase in its pre tax profit and profit after tax by 23% and 110% respectively. Coupled with increase in the company’s earnings per share from N23.94 In previous year to N50.37 in 2022 recording an increase of N23.94 representing 110%.

If then considered in terms of its price, which is slightly above N10. It looks attractive when compared to 52-week high of N12.30 along with current 40kobo dividend recently being declared.

What is driving the volume in Transcorp? Is it a good BUY at the current price?

The driving force behind the price of Transcorp is a result of recent activities in the market where a single investor, Mr. Femi Otedola is acquiring about 5.52% of shares. The deal was consummated between the billionaires businessman through AMCON, making him the second largest shareholder in the company.

On the backdrop of the company’s last performance, it looks attractive having a cheap price and current declaration of 5 kobo dividend to be paid to its shareholders, it is a good BUY.

KPMG projected Nigeria’s unemployment rate to hit 41 per cent in 2023. How is this likely to affect capital market participation?

Looking at the figure in terms of Nigeria projection rate of 41% in 2023, it is likely to have a negative impact on capital market participation in the country. This means that high levels of unemployment typically lead to lower consumer spending, which will result in a reduction in business activity and lower corporate earnings. This, in turn, can lead to a decline in the valuation of listed companies and a decrease in the demand for stocks and other securities.

Though, it’s important to note that the relationship between unemployment rates and capital market performance is complex and multifaceted, other factors such as government policies, interest rates and global economic conditions can also play a significant role in determining market performance.

IMF has projected 3.2 per cent economic growth for Nigeria in 2023, the same as the previous year. Is this growth feasible considering the current economic realities?

The International Monetary Fund (IMF) projection of 3.2% economic growth for Nigeria in 2023 may be possible, it ultimately depends on a variety of factors such as government policies, global economic conditions, and the ability of the country to manage internal challenges such as security concerns, corruption, and infrastructural deficiencies. It is therefore, also important to note that the projected growth rate for Nigeria in 2023 is not very high compared to other developing economies.

However, the projected growth rate for Nigeria in 2023 is feasible, It only requires modest progress and if significant issues relating to growth are addressed.

World Bank reported that naira depreciated by 10.2 per cent in 2022. What strategy can investors use to break even in the capital market?

In view of the World Bank report, investors only need to strategize in their approach in order to minimize effects of depreciation of the Naira in areas of their investments in the capital market.

First of it is that investors can hedge their portfolio against currency volatility by investing in foreign currency denominated assets. This allows them to offset the risks of currency fluctuations.

Also along that line is to consider diversifying their investing across different sectors, instruments, picking interest in money market to minimize the impact of currency fluctuations in their overall portfolio.

Lastly, is that investors should invest in quality stocks that are less affected by currency fluctuations such as blue-chip stocks rather than small-cap stocks, which are usually unstable.

What are the stocks to watch?

Stock to watch for the remaining days of the week are TRANSCORP, Mansard, UBN, NAHCO, UCAP, International Breweries, AIICO Insurance and many more.

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