Ruth Ibikunle
The Nigerian stock market last week closed lower by 2.71%. Year to date, the market has returned 33.12% with the All Share Index and Market Capitalisation at 99,539.75 points and N56,296 trillion respectively.
In a stock market review with the MD/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi who was recently appointed on the Board of Securities and Exchange Commission (SEC) as Non- Executive Commissioner, the following were discussed:
Excerpts:
The stock market last week closed on a bearish note with a decline of 2.71%. What is the outlook for the new week?
The All Share Index shedding some basis point is normal at this time especially when most of the Banks have declared their Financials with Corporate actions.
The new outlook may continue except with the change in the Management of SEC, the Apex regulator by the President. The market may react different.
All the banking stocks shed their prices except Ecobank that closed flat. What could be responsible for the sell-off in the banking sector despite the impressive FY 2023 result?
The Banking Sectors shed their prices because the dividend declared by most of the Banks increased compared with the previous years but did not meet the market expectations.
Ecobank is yet to declare their financial. Banking Sectors sell off has to do with price appreciation and profit taking. Most of the Banking stocks gained more than 100% price increase that is why you are seeing more sell off.
What is driving the recent growth in the share price of Guinness?
The prices of Guinness is rising because of thier Financial year end June which is less than three months to come, some are taking position in anticipation of good result for the year ended 30th June 3024.
The proposed merger of NASCON, Dangote Sugar and Dangote Rice has been suspended. What is the fate of those who took position in these stocks because of the proposed merger?
Yes the merger has been suspended as announced by NASCON but not discontinued. We need to hear from Dangote Group when it will come but are yet to say anything. For those who already took position, they can either hold onto it or sell to cut losses and buy back at the right time.
Nigeria’s Inflation rate has increased to 33.20%. How would this affect the capital market?
The Nigerian inflation is now 33.20%, an increase of 150 basis point. It will affect the capital market in two ways, firstly, it will lead to rise of MPR which currently is 24.75%, this will make us experience more funds movement from Capital Market to Money Market which in turn will lead to more sell off of stocks while All Share Index falls less than 100,000 basis point.
CBN has ordered Deposit Money Banks to reduce loan-to-deposit ratio to 50% from 65%. Will this affect the capital market?
This is normal in view of the increase in CRR from 30% to 45%. This may not affect the Capital market since Banks doesn’t invest in the Capital market.
What are the stocks to watch?
Access, UBA, GTCO, Zenith Bank, Japaul Gold among others.