Ruth Ibikunle
The Nigerian stock market last week closed on a positive note with 0.11% growth. Year to date, the market has returned 29.66% with the All Share Index and Market Capitalisation at 66,454.57 points and N36.510 trillion respectively.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
Excerpts
• The market last week closed on a positive note with 0.11% growth. What is the outlook for the new week?
The stock market is the barometer that measures the pulse of the economy, so the negative information at the market has been generating mixed performances in the market.
But last week, which marked the beginning of the month of October, which is the month where the expectation of Q3 2023 earnings releases starts, the market on the aggregate closed positive.
The market closed positive on Tuesday, declined on Wednesday, appreciated on Thursday, and declined on Friday.
Most banking stocks posted impressive Q22023 results, so the market is putting the expectation of the same performances in Q32023 at the back of its mind while pricing banking stocks.
As we go more into the month of October, I have the expectation that the market will become stable and maintain its upbeat while awaiting the early birds in terms of the Q32023 earnings releases.
• VFD Group and NIDF have been listed on NGX at N269.3 and N108.4 respectively. Are these prices not too high at the entry-level? How will these newly listed entities impact the market?
When a stock is going to be listed on the floor of the exchange, there is usually a constituted price quotation committee that will look into the books of the company to determine its value and the listing price.
Members of that committee consist of experienced and qualified individuals in that capacity. So, if the prices of VFD and NIDF are quoted at N244.88 and N108.40 respectively, it means that was what the committee arrived at.
The price of VFD closed at N269.30, an appreciation of 10%. But if investors feel that the prices of both listings are too high, the market as a discounter, will discount the prices and reprice them accordingly.
With an EPS of N18 and a share outstanding of 190m units for VFD, the coming days in the market will reveal whether it is properly priced, overpriced, or underpriced.
The impact of the new listing is that it will help to deepen the market and increase market capitalization, especially in the face of the looming voluntary delisting of Glaxo, PZ, and Oando from the Bourse.
• Why is Dangote Cement trending down?
As of September 26, 2023, Dangote Cement was trading at N334.00. It rose to N340 on the 29th and closed the month at that price
On October 6, the stock declined to N310.10. There has been no bad news surrounding the stock save the news of the reduction in the price of cement by BUA Cement. Since there was no response from the company, the market may have believed that the competition would now be skewed in favor of BUA Cement and may affect Dangcem’s turnover.
But I still don’t believe that that sentiment would last. Chances are that the next trading day will see the market reversing the stock price back to what it ended the month of September with.
• What is driving the growth in FTN Cocoa?
Since the issue of FTN Cocoa’s access to a facility of $6m and the eventual rise in its price to an all-time 52-week high price of N4.10, the stock has been marked for speculation by the market.
With zero revenue in their last quarterly report, the only thing that can be responsible for an increase in the price of that stock is the mere run of play in the market
• How sustainable is the current rally in BUA Cement? Is it a good buy at N94?
The public announcement of the fixing of the ex-factory price of a bag of cement at N3,500 by BUA Cement has witnessed the price of the stock appreciating.
The extent to which the price will go depends on the mood of the market and the response of the other Cement companies listed on the exchange.
BUA Cement’s 52-week high price is N99.70. Whether the news in the market arena is sufficient to break that resistance is what the coming days in the market will have to prove.
• What are the stocks to watch?
Transcorp, Dangote Sugar, Nascon, Fidelity, UBA and FCMB