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High investor appetite to boost market fortunes

By on May 17, 2016

The stock market will this week see more positive trends with respect to investors’ interest and appreciation, analysts have said.

The market is expected to ride on the back of the recent budget signing and pricing review in the downstream segment of the country’s petroleum industry.

Following the significant gains recorded in the market last week, analysts believe it will start positive this week.

“We expect the market to open to gains in the coming sessions, riding on upbeat investor appetite,” analysts at Vetiva Capital Management Limited said in the company’s weekend report.

However, they said ahead of the release of the April inflation figure scheduled for Wednesday, it was anticipated that there would be some sort of cautious trading with a bearish bias in the fixed income market.

Nigerian equities closed the past week with a bullish bias. Notably, investors looked beyond oil production cuts from militant attacks on major pipelines as the signing of the 2016 budget and the partial liberalisation of the downstream oil and gas sub-sector provided catalysts for gains.

The Nigerian Stock Exchange All-Share Index climbed 288 basis points week-on-week, helped by a sizeable gain on Friday (+223bps), moderating year-to-date losses to 7.7 per cent.

Trading in the Treasury bills market was mostly mixed through the week, albeit with bearish bias as healthy system liquidity supported demand on some maturities and as investors speculation over April inflation figure due for release this week drove yields higher on other maturities.

Overall, yields advanced  by 70bps across T-bills maturities. The bond market, however, was largely bearish through the past week as investors maintained a risk-off stance. Bond yields advanced by 62bps week-on-week on average across maturities.

Global markets traded mostly mixed, albeit with a bearish bias, as most bourses recorded more losses in the past week. Notably, a decline in oil prices and weak Chinese data weighed on investor sentiment at last week’s open while a recovery in oil prices sent markets higher on Tuesday.

Global bourses, however, came under pressure Wednesday through Thursday on the back of a number of disappointing earnings releases and weaker Yen despite sustained gains in oil prices.

At week close, Asian markets maintained the downtrend while European and United States markets rebounded as investors eyed a number of positive economic data.

At the NSE, there were 55 advancers and 17 decliners. Tiger Branded Consumer Goods Plc was the week’s highest advancer with 50.13 per cent week-on-week return, while University Press Plc recorded the highest loss in value, declining by 14.21 per cent week-on-week. Volume traded and market turnover, in comparison to the previous week, jumped by 100.49 per cent and 125.75 per cent, respectively.

Last week, following the meeting held by Vice President, Yemi Osinbajo leadership of the Senate and House of Representatives, the Nigeria Governors’ Forum and labour unions, the conclusion was reached that any Nigerian entity could import Premium Motor Spirit subject to existing quality specifications and sourcing of forex from the secondary market.

Also, the Petroleum Products Pricing Regulatory Agency announced a new retail price band of N135-N145 per litre for petrol effective May 11, 2016.

The NSE implemented its compliance status indicator codes during the week to aid transparency and informed investment activities. The codes are to be displayed on the ticker tape of affected companies.

Analysts at Meristem Securities Limited, in the firm’s weekly analysis, said, “We anticipate increased position taking on counters perceived to be positively impacted by the recent news inflows (budget implementation and new fuel price), including companies within the building material, construction, and oil and gas sectors. We, however, note the possibility of profit taking on counters that have accumulated gains during the week concluded.”

The Debt Management Office conducted an auction during the week on the February 2020, January 2026 and March 2036 bond re-openings. Marginal rates at the auctions were 13.25 per cent, 13.74 per cent and 13.90 per cent in the same order.

 

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