BY BAMIDELE FAMOOFO
Sell-sentiments in some of the mid and large stocks continued for the sixth straight week of negative performance on the domestic equities market as the benchmark index tanked by 1.04 percent week on week to 51,355.74 points last week.
The downturn was despite the rekindled buying interest of investors with increased bargain hunting activities as well as more position takings ahead of more Q1 corporate earnings inflow witnessed recently in the local bourse.
Also, the market volatility remains at the extreme majorly driven by mixed sentiments while investors continue to seek safer investment haven as a hedge against inflation in the face of attractive fixed income yields in the money market. As a result, the market capitalization of listed equities plunged 1.08 percent week on week to N27.96 trillion as it shed N304.49 billion in losses in the reviewed trading period ended April 20, 2023.
Across the sectors last week, performance was largely on a mixed trend across the indices under the purview analysts with Cowry Assets Management except for the Insurance and Consumer Goods sectors which appreciated by 1.14 percent and 0.17 percent week on week on the back of renewed buying interests in TRANSCORP, MANSARD. On the other hand, Banking (-2.54%), Oil & Gas (-1.43%) and the Industrial Goods (0.17%) indices emerged as the decliners this week as a result of sell-pressure in ZENITHBANK and COURTVILLE.
At the close of the week, the level of market trading activities was positive as we saw the total number of deals surged to 16,856 by 7.47 percent week on week as market players recorded higher traded volumes by 38.83 percent for the week to 3.92 billion units that was valued at N15.62 billion, which is an increase of 74.72 percent week on week on increased buying interest.
Meanwhile, the top-gaining securities for the week were TRANSCORP (+45%), FIDELITYBK (+14%), and ACCESSCORP (+12%), while the laggards this week were ZENITHBNK (-12%), CHAMPION (-10%), and UBA (-8%).
In the week to come, analysts expect the current trend to linger if the selling sentiment among the highly priced stocks moderates and liquidity in the market improve further on dividend payment as more and more companies hold their AGM for shareholders to approve payment. However, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook.
Meanwhile, the DMO allotted N368.67 billion worth of bonds across 13.98 percent FGN FEB 2028, 12.50 percent FGN APR 2032, 13.00 percent FGN JAN 2042, and 12.98 percent FGN APR 2050 bond re-openings in the just concluded week.
Notably, the total subscription amounted to N444.03 billion (its lowest since November 2022), while the auction’s bid-to-cover ratio, a gauge of demand, fell to 1.20x from 1.43x at the last auction in March. The non-competitive allotment was N29.00 billion for the 13.98 percent FGN FEB 2028 bond, N94.50 billion for the 12.50 percent FGN APR 2032 paper, and N60.30 billion for the 13.00 percent FGN JAN 2042 debt, bringing the total sales to N552.47 billion (implied bid-to-cover ratio: 0.80x). Total bids stood at 228, while 173 were successfully allotted at stop rates ranging from 14.00 percent to 15.80 percent.
Notably, marginal rates for the 28s remained unchanged at 14.00 percent, but rates for the 32s expanded to 14.80 percent (from 14.75%). The newly re-issued 42s and 50s were sold at 15.40 percent and 15.80 percent, respectively.
Elsewhere, the values of FGN bonds traded at the secondary market moved in line with 28s in the primary market as most maturities traded flat, especially at the front tail of the curve.
Specifically, the 16.29 percent FGN MAR 2027 and the 15-year 12.50 percent FGN MAR 2035 debt yields remained unchanged at 13.49 percent and 14.75 percent, respectively. The 30-year 12.98 percent FGN MAR 2050 bonds lost N0.45 while their yield contracted to 15.69 percent (15.60%) as investors sold to mitigate interest rate risks.
The 20-year, 16.25 percent FGN APR 2037 paper yield fell to 15.33 percent (from 15.40%) amid demand pressure. Meanwhile, the value of FGN Eurobonds traded on the international capital market depreciated for most maturities tracked due to sustained bearish sentiment. Specifically, the 20- year 7.69 percent FEB 23 2038, and the 30-year 7.62 percent NOV 28 2047 re-priced lower by USD 1.10, and USD 0.95, while their corresponding yields expanded to 13.57 percent (from 13.14%), and 13.07 percent (from 12.87%), respectively.
This week, experts expect yields to rise as local OTC bond prices decrease. However, traders may be cautious to bid higher if they sense any bullish turn in the issuance of T-bills by CBN in the new week.
