Ruth Ibikunle
The Nigerian stock market last week closed on a bearish note amidst profit taking, shedding 0.94% week on week. Year to date, the market has returned 1.98% with the All Share Index and Market Capitalisation at 104,962.96 points and N65.82 trillion respectively.
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 bearish note, shedding 0.94%. What is the outlook for the new week?
The market last week experienced four trading days of losses and halted five straight days of losses on Friday when the market closed at 0.10%
The Oil and Gas index experienced the highest decrease amongst other indexes to close the week at a negative reading of 1.08%.
The market is reacting to the poor projected dividend payouts from issuers. This is against the backdrop of the fact that most listed stocks are trading close to their 52-week high prices and investors are having negative sentiments about some reported financial results.
The market believes that issuers will not be able to declare a dividend commensurate with current prices and that achieving a dividend yield of 10% will be a herculean task in 2025.
Discerning investors are taking out their funds at this early stage to avoid the rush to sell when dividend declarations start cascading into the market, especially from the banks and the insurance companies.
Though the volume of trade is diminishing we are going to experience mixed outings for the week.
• What is driving the growth in Neimeth and Linkage Assurance?
According to the released UFS of Linkage Assurance Plc, the company grew its Turnover by 52% and experienced a decline in its PAT by 5%.
In Its Unaudited Financial Statement, Neimeth disclosed a growth in its Turnover by 102% and a better loss after tax of N1.669b as against N2.757 representing a growth of 38%.
The market is taking the prices at which the two stocks are trading into cognizance and beginning to find value in them.
• How attractive are Tantalizers at N3.10?
Tantalizers during their fact behind the figures recently disclosed their intention to diversify in the Blue Economy by their acquisition of Fishing Trawlers and their securing a facility of $50m.
This move has created a great future for the company considering where it is coming from and the market believes that as at the time the company goes fully into this blue economy, the sky will be too close to be its limit.
Tantalizer is a stock of the future for those who have the patience to wait.
• PZ shareholders disagreed on the conversion of the Company’s debt to equity. Is this news likely to affect the price of PZ? –
Of course, it definitely will. There has been a demand for the stock because investors believed that the moment the weight of indebtedness is lifted off the shoulders of the company it would have the leverage to breathe and perform.
The interest element would have been expunged from their books of account to sanitize them. But this rejection brings the company to status-quo-ante and new investors who came into the stock because of the perceived hope will begin to move their resources elsewhere and that movement may depress the price of the stock.
• The National Bureau of Statistics has reported that the inflation rate dropped to 23.18% in February. Is this likely to impact market participation?
The Nigerian inflation reading was at its peak in the year 2024 and the NBS found it worthy to rebase the inflation by moving the base out of 2009 to 2024. While doing this, they also substitute new consumption baskets that were not available and not included as in the last composition with those they find obsolete or that the consumption pattern of the country has shifted away from.
Be that as it may and given the relative stability in the polity, especially the money market interest rate and the reduction of the price of pms, it is given that subsequent inflation will be trending down.
When inflation continues to decline, the MPC Committee of the CBN will see the reason to adjust the MPR downwards which will lead to a reduction in the cost of investments and funds. The multiplier effect of that is that prices begin to tank and the reduction in interest rate will hamper the yield in the money market. Discerning investors looking for superior returns will look in the direction of the capital market and there will be adequate liquidity once more to bubble the market.
• What are the stocks to watch?
Lafarge (Wapco), Tantalizers, Dangote Sugar, Nascon, Aradel, Ecobank and a host of others