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Unimpressive macro environment depresses stock market

The Nigerian Exchange Limited, NGX, has recorded a second consecutive sluggish week, as sell pressures from highly capitalized stocks persists Week-on-Week, WoW at the backdrop of the unimpressive macro environment which remains a significant headwind for corporate earnings, according to analysts.

Consequently, sell pressure on Dangote Cement forced down the share price by 8.5%, offsetting the gains in BUA Foods and Airtel Africa to trigger a 0.1% WoW decline in the NGX All-Share Index to 67,324.59 points.

As a result, the Month-to-Date, MtD, and Year-to-Date, YtD, gains moderated to +1.2% and +31.4%, respectively.Further analysis showed that the decline was mainly driven by increased selling activity in Oando, which had been on a nine-session winning streak, as well as banking giants like Guaranty Trust , GTCO and Sterling Holding along with the industrial goods company Dangote Cement .

The market capitalization declined to N36.85 trillion. Despite the negative market performance, the market breadth stood at 44 declining stocks compared to 39 advancing ones.

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The total trading volume saw an impressive 151.53% expansion to 1.03 billion units while the total value traded down 16.79% to N4.35 billion.

The stocks with the highest trading volumes included Universal Insurance recording 1.66 billion units, UBA 254.35 million units, and Access corporation 169.49 million units, while the top performers in terms of trading value were UBA N4.46 billion, Airtel Africa N2.99 billion, and Access Corporation N2.92 billion.

Commenting on the market outlook, analysts at Cordros Research said: “In the short term, we anticipate cautious trading in the local stock market due to the absence of significant positive catalysts to boost sentiments. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the unimpressive macro environment remains a significant headwind for corporate earnings.”

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Reacting as well, analysts at Comercio Partners Research stated: “We expect a calm start to the new week as there is need for positioning in only fundamentally sound stocks.”

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