Ruth Ibikunle
The Nigerian stock market on Monday continued its southward journey as the All Share Index dropped by 0.28%.
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 on a bearish note, shedding 1.39%. It continued the downtrend on Monday by 0.28%. What is the outlook for the week?
The stock market during this period will have no choice rather to continue to experience mixed outcomes as liquidity is scarce around the market arena due to capital flight from the capital market to the money market.
The outcomes of the recent Primary Market Auctions for Bonds and TBs have shown the renewed zest for money market instruments by investors.
The last PMA for TBs closed at 20.7% for a 364-day tenor and that of Bonds closed at about the same yield for a 10-year tenor.
The FDIs understand the trading of bonds seriously and they also know that the current interest rate regime in the economy cannot be sustained.
No government can run with this type of interest rate for more than a year without serious adverse economic implications. And the FDIs know that they would be locked into a position of the extant yield for the next 10 years.
Imagine what would accrue to them when rates start slowing down.
On that note, this week’s market, slated to trade for four days will also experience a mixed outcome.
But as the Q12024 reports and good performances continue to enter the market, we may see the market finishing more vibrant than downwards to the end of the week.
• What is driving the growth in Sterling, FBNH, Fidelity, Access, FCMB and UBA?
Stocks, on a general level, have been battered by market forces and have fallen far away from their previously set 52-week high prices.
When the price of a stock begins to trend down not out of peculiar information or seasons, especially when such is premised on generic market conditions, it will get to a point that the market will perceive that such had bottomed out at a particular price threshold and the market will consider such as cheap.
At the nick of that point, the market itself would move to reprice such stocks and that movement will reverse the trending down action.
That is the condition in which these stocks find themselves.
• What are the possibilities in Dangote Sugar?
The business combination of Dangsugar with Nascon and Dangote Rice has been suspended. I think the suspension would give room to the parties involved to have clear heads to think and to straighten out whatever differences were noticed by the SEC that led to the suspension.
Except the arrangement is called off, the price at which the stock is trading can be an advantage and opportunity to average down one’s position.
Several investors bought this stock at N89, but at N43.20 where it is currently can be used to even out the high cost but with the proviso that the deal would still scale through at the end of the day.
• Will Oando still delist from NGX?
Since the notice of delisting from the NGX, Oando has been embattled by its shareholders and taken to court. And the case is enjoying adjournments by the court.
It is based on the adjudication of the court that we will know for sure which direction the pendulum would swing, and whether the company is going to delist from the exchange or not.
So, let’s keep our fingers crossed, wait, and watch for events to unfold naturally.
• What are the stocks to watch?
Japaulgold, Access Bank, Zenith, Wema, UBA, MTN, and a host of others.