Ruth Ibikunle
The Nigerian stock market last week closed on a positive note with 0.87% growth. Year to date, the market has returned 34.46% with the All Share Index and Market Capitalisation at 100,539.4 points and N56.929 trillion.
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 on a bullish note with 0.87% growth week on week. What is the outlook for the new week?
The week under review is the third week of July—the month of the moratorium period given to the issuers to release their Q2 earnings every year. At the beginning of the month, some of the issuers fulfilled this post-listing requirement by the NGX.
So far, the results we have seen are short of being qualified as dismal. Geregu Q22024 was with a good growth. We did not see a commensurate movement in the price because the price was already within the 52-high established by January of this year. Champion Brewery also was not bad and UCAP went ahead and crowned the performances of the released results with a mouth watery benefit to investors.
This coming week is the fourth week of July leaving only three working days after it.
We may witness a plethora of result releases and if the performances of the early birds are anything to be reckoned with, the market believes that there would be favourable growth in the expected results.
And as such, the market as a discounter any day will respond accordingly and appropriately.
• How sustainable is the growth in United Capital? Is it a good buy at N40.55?
The 2:1 benefit by UCAP to investors caught the market and investors unaware, To some it was practically impossible to give that kind of bonus of 2:1 and a N0.90 interim dividend.
Granted that the benefits would be marked down from the price of the stock on the marked-down date but the 2:1 is still unprecedented in the market,
On Friday, we witnessed the supply of a good quantity of the stock that halted the rally streak and it could not gain the maximum for the day, but with that kind of huge benefit, I don’t see the stock closing at N40.55 at the end of the day.
And if peradventure it did and it is marked to like N16.00 or thereabout, the forces of the market will reverse it back to at least a price in the neighbourhood of N20.00
• What is driving the growth in Africa Prudential?
The market believes that Afriprud and UCAP are splinter from the same parent, Siamese twins, and should have the same DNA.
It also believes that the companies are on the same puppet string and their behaviours and movements should be in sync.
But we have forgotten that the two companies specialised in different lines of business. UCAP is a financial hub while Afriprud’s major business is registrar.
The recent move of the market, led by the SEC to depopulate the balance in the unclaimed dividend accounts has stirred a limitation in the registrar’s business.
Consequently, investors are taking positions in Afriprud ahead of a reenactment of such a declaration from UCAP.
The frenzy to preempt the news is what is responsible for the price increase in Afriprud.
• How attractive are Fidelity Bank, Access Bank and GTC0?
If history is anything to borrow a leaf from, the market growth and rally from 2004 to 2008 was orchestrated by the effect of the 2004 DMBs recapitalization
In January 2024, most stocks set their prevailing 52-week high prices and the expected effect of this recapitalization exercise is that the prices might revert back to their set 52-week High price for whatever it is worth.
Invariably, the available rights and public offerings in the market are attractive but the removal of technical suspension of price during capital market activities has hampered the prices of the stock on the floor.
There would be a correction of price after the offers.
• Nigeria’s inflation rate has grown to 34.19%. Are there stocks whose return can beat inflation?
The growth in the inflation rate and the move of the CBN to rein in its steady growth is the bane of the stock market as we speak.
If you want to look retrospectively, yes but from now till December 31, 2024, the probability is minute.
Analysts think that the release of Q2 2024 and their attendant growth in returns coupled with the declaration of benefits for shareholders might likely Stoke a rally but each stock growth over the inflation figure might be uncommon to come by in the H2 2024
• What are the stocks to watch?
UCAP, Cutix, Veritas, Tantalizers Transcorp, and a host of others.