Ruth Ibikunle
The stock market last week closed marginally lower by 0.08%. Year to date, the market has returned 39.89% with the All Share Index and Market Capitalisation at 104,562.06 points and N59.121 trillion respectively.
In a stock market review with the MD/CEO of GlobalView Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
• The stock market last week closed marginally lower by 0.08%. What is the outlook for the new week, new month and the second quarter?
The moratorium month of March has just ended and this week is the first working week of April 2024. And a number of AFS cascaded like an avalanche into the market over the holiday period with good dividend declarations.
The only thing to do for the investors is to sit with the results and do thorough analysis and rank the dividends either in relative or absolute terms in order to decide which of the divide he would want to sit.
These activities and the quest for portfolio rejigging and realignment would create the effect to make the market close in the green zone.
In an earning season, the market has no option than to look up
• What will be the fate of banks with the new capital base requirement? How will this affect existing investors in banks?
We saw what happened in 2004 with the bank’s recapitalization in the Soludo’s central bank era.
The frenzy was what brought the stock market to the whole nation and the world at large.
The possible thing that can happen apart from success of individual banks to top up their capital base is M&A (Merger & Acquisition)
For the banks that would not be able to meet up will either be acquired or merge with another banks.
I am not seeing a situation where the investors would be ripped off just the way it happened in the post recapitalization era of 2004.
The very worst that could happen would be the pro-rated rate of exchange of units of share when it comes to either merging or acquisition.
But the latitude to the banks to cycle out of this situation is fairly wide, 24 months. Any serious Board of any bank would not find it a herculean task scaling this hurdle given the length of time
• What will be the impact of the new Monetary Policy Rate of 24.75% on the equity market?
The MPR raise by the CBN is targeted at taming the increasing inflation in the country
The CBN is embarking on a contractionary monetary policy, Ordinarily, the economy is being moderated by the twin policies, Fiscal and Monetary.
But at the absence of the Fiscal, because of the present situation the country has found itself, the CBN cannot just fold its hand and watch the economy goes down the drain.
The reason for the hike is to mop up the currency in circulation, discourage lending and encourage savings.
The pursuit of the CBN is to also stem the rise of the dollar and maybe bring it down to a bearable level, if that comes to pass, the cost of doing business will also come down, cost of energy will also come down and consequently inflation will likely be downward looking.
All these will create a new equilibrium in the economy and the new equilibrium will create a multiplier effect in the economy and will engender growth and increase the welfare of an average citizen.
• How attractive is Access Holdings based on the recently released Audited Report?
We are all a witness of the rise in the prices of all stocks from the inauguration of the present administration in May 2023 till date.
Access Bank with its N1.80 dividend declaration, blaze the trail of good dividend for 2023 FYE and no matter what was the negative sentiment behind the bank before has been erase by that singular act.
For a discerning investor who takes pride in dividend, especially in the absolute terms, Access Bank looks good.
But if you talk about dividend yield in this current market, it would be a worry to someone who is just coming from the holidays in the Maldives, Acapulco or Honolulu since May 2023.
Because an average investor in the market has already benefited from the increase in the prices an as such would not be particular of the yield.
• GTCO and Zenith Bank touched N52.5 and N44.5 respectively last week. Can somebody still take position at their current prices?
The prices of the two stocks have created new 52-week high prices, but for those who are interested in the absolute dividend value and not view dividend declaration in relative lens, taking position is not a bad idea.
We know that ultimately the prices would be marked down for dividend, but it is only the almighty that can foretell what the capital market activities they are going to be involved in, in a bid to recapitalize would amount to.
• What are the stocks to watch?
Access, UBA, UCAP, FCMB, Fidelity and a host of others.