Ruth Ibikunle
The stock market on Monday closed on a bearish note shedding 0.38%. Year to date, the market has returned 37.81% with the All Share Index and Market Capitalisation at 103,047.07 points and N58.277 trillion respectively.
In a stock market review with the MD/CEO of GlobalView Capital, Aruna Kebira, the following were discussed:
Excerpts:
• The market last week closed on a bearish note, declining by 1.08% amidst several corporate actions. It dropped further on Monday by 0.38%. What is the outlook for the new week?
The market has looked up from the inauguration day of the current administration and we have seen stocks returning as much as 500%.
The discerning investor is always looking for which side his bread would be better buttered.
As such he always considers his effective ROI against his principal. The money market instruments yield between 19-22% per annum currently, so an average investor, gauges and worth his investment through that lens.
As a result of the spike in the prices of stocks, the current dividend declaration does not meet the market’s expectations.
What we are currently experiencing is due to portfolio realignments, rejigging and I bet you funds are trickling out to pursue a higher yield elsewhere.
Well, we have just seen the dividends declaration from both GTCO and Zenith, that from Zenith is quite encouraging than the GTCO’s. This might also result in a slowdown in the price of GTCO or the price of Zenith will rise and surpass that of GTCO. UBA has also done noble and has presented to the market the best dividend yield as we speak.
Most issuers have muted the ideas of coming to the market for capital market activities and capital raise, the investors are taking their time assimilating the information, but in the intervention period, a lot are stepping aside to wait and watch what would likely be the gross effect of these actions before coming back
The performance of the market for the week would be mixed, more so that two days out of the week would experience no trading.
• Banking stocks dominated losers last week. The downtrend continued on Monday. What could be the factor behind this?
The increase in the capital base of the banks and the condition by the CBN concerning whether their reserves could form part of the new capital raise or not is taking a toll on the prices of the banks.
Several investors feel that most banks, if the current directives scaled through, may not be able to survive alone. And they believe that the inability to stand alone after the exercise may spell doom for the banks and the shareholders.
Just yesterday, the CBN also directed that banks should not use their foreign currency-dominated collateral for the Naira loan. After they were directed not to use the gains from the unification of the exchange rate to pay dividend nor operational expenses.
•How attractive is FBN Holdings at N29.05?
The price of FBN is trending down because of the dividend declaration and the disappointment of the market in some of them
It is believed that the ability of FBNH to declare a commensurate dividend to its price tends to be zero. Therefore, investors are exiting the bank to others they believed that their dividend yield would be meaningful to their investments
But we all know that the movement in that price is not dividend-dependent. The price would rally whenever it is ready.
• Nigerian Breweries is raising N60 billion via Rights Issue. How attractive is the stock at N28.90?
Nigeria Breweries and its counterpart in the brewery industry were hit by the unification of the exchange and the devaluation of the local currency and their earnings were badly affected, causing them to witness huge losses and a negative impact on their shareholders’ funds. The idea of coming to the market is to raise capital to shore up their operations by way of adequate working capital, increase their shareholders’ funds, and bring their reserves to a positive position.
At the current price, the stock looks attractive but with a proviso that the investor could hold his position until the capital formation exercise has come and gone and that it was successful and ready to hold that position until the funds are put into good and productive use.
• What are the stocks to watch?
UBA, Zenith, Dangsugar, NASCON, NAHCO, Japaulgold and a host of others