Ruth Ibikunle
The stock market on Tuesday grew by 1.3%, bringing the All Share Index and Market Capitalisation to 60,108.86 points and N32.73 trillion respectively. Year to date, the market has returned 17.28%.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
The market on Tuesday closed on a bullish note with 1.3% growth. What is driving this current vibration?
I have said in my previous write-ups that as far as the current government policies are in the proper perspective in the eyes of the investors and also because we are approaching the earnings season for Q2 2023, where dividends would be declared, the only path the market has to toe is the upward path.
If you notice, most of the stocks that contributed to this current vibration are yet to get back to the last 52-week high prices they set in the month of June.
Until they repeat and surpass those prices, we may continue to see this frenzy in the market.
Most penny stocks grew their shares significantly on Tuesday. How sustainable is this rally?
When the market is good, all stocks become good; likewise, when the market is bad, all stocks become bad.
The current market tempo is strong enough to whip every stock. And don’t also forget that because most of those stocks had been at their car park prices, what they require for maximum gains per day is like chicken feeds to investors.
This we are going to see for some time, but bear in mind that investors would be taking their profits intermittently.
Northern Nigeria Flour Mills declared a 35kobo dividend to shareholders for the year ended 31 March 2023. The price has been stagnant at N13 for a while. What is the possibility of price growth for this stock?
A dividend of N0.35 at a price of N13.00 would yield 2.7%. Since the Russian-Ukraine war, wheat, which is a major component of the input of flour mills has been so expensive that its cost is eroding away a significant part of their revenue.
FMN, Honyflour, and NNFM have been adversely affected, which shows prominently in their quarterly and annual returns. And the event is a major blow to their bottom line.
This might be the reason why investors develop apathy for flour mills stocks and NNFM is not left out.
The 2.7% dividend yield would not have been enough push for the price of the stock, but because the market is generally good, the chance is, that the market may appreciate even the little that they have been able to do.
What are the possibilities in Access, UBA, Zenith, FCMB, GTCO, and FBNH?
Access, I believe is now in the consolidation stage from all the acquisitions and expansions they have been embarking upon. And as far as their returns are on the increase and threatening to even up with the likes of Zenith and GTCO, there will be reasons why the price also would not level up with their prices.
UBA and Access used to be seen by the market as belonging to the same peer group, but Access has tactically reclassified itself away from that group. Nevertheless, as the price of Access moves away from its current price, the market would also push that of UBA towards it. The grudges from investors against these two stocks are that they are selfish with their dividend payouts but Access has distinguished itself with the recent N1.30 dividend declared. But I also believe that UBA may follow suit and surprise the market.
GTCO, Zenith, FCMB, and FBNH are all banking stocks. As we can see in the market, the rally is more from them. Like I said before as far as the government policies remain market-friendly, we may not have seen the climax of the prices in the market.
What are the stocks to watch?
Nigerian Breweries, Guinness, Presco, Eterna and Transcorp