The Nigerian equities market operated by the Nigerian Exchange Limited last week maintained its bullish trend, with the NGX All-Share Index edging up by 0.11 percent week-on-week to close at 97,829.02 points.
This marginal gain was achieved despite a significant pullback in the banking sector, driven by notable price declines in major banking stocks.
The positive performance was underpinned by robust gains in large-cap stocks across the insurance, consumer goods, and industrial sectors, which offset profit-taking activities in banking equities.
The market capitalization also expanded by 0.13 percent week-on-week to N59.29 trillion, primarily boosted by the addition of 3.12 billion ordinary shares of Haldane McCall to the main board of the exchange through a listing by introduction.
This added over N12 trillion to the market cap, translating into a week-on-week gain of N76.9 billion for investors. As a result, the year-to-date return for the market climbed to 30.83 percent.
Market breadth was positive, with a ratio of 1.55x, as 51 stocks advanced compared to 33 decliners.
Investor sentiment reflected a mix of optimism and caution, shaped by the proposed 2025 budget of N47.90 trillion and anticipation of the Central Bank of Nigeria’s Monetary Policy Committee meeting, where interest rate direction is a focal point.
Trading activity saw declines in both the number of deals and trading volume, which fell by 7.74 percent and 24.08 percent week-on-week to 44,795 deals and 1.48 billion shares, respectively.
However, the value of transactions increased by 8.4 percent week-on-week to N38.88 billion, indicating selective but higher-value trading.
The week’s gains were broad-based across most indices except for the NGX Banking Index, which shed 2.57 percent week-on-week due to persistent sell-offs in key banking stocks, including FBN Holdings (FBNH), Access Holdings (ACCESSCORP), Sterling Financial (STERLING), United Bank for Africa and Guaranty Trust Holding Company.
Conversely, the NGX Insurance Index led the sectoral performance with a 4.54 percent week-on-week gain, followed by the NGX Consumer Goods Index 1.93 percent, NGX Industrial Index 1.75 percent, and NGX Oil & Gas Index 0.18 percent.
These gains were buoyed by significant price increases in stocks like EUNISELL, Tantalizer, Guinea Insurance, Dangote Sugar, Mansard Insurance, Lafarge Africa, and Japaul Gold.
At the close of the week, EUNISELL up by 61 percent, Tantalizer 57 percent, John Holt 43 percent, Austin Laz 34 percent, and Lafarge Africa 29 percent, emerged as the top-performing stocks for the week, benefiting from strong buying interest.
On the flip side, MECURE down by 19 percent, Multiverse 18 percent, PZ Cussons 12 percent, University Press 12 percent, and Northern Nigeria Flour Mills 10 percent recorded the most significant losses, reflecting profit-taking and weaker investor sentiment in these counters.
Looking ahead, Cowry Research predicts that the market is likely to trade in mixed directions as investors react to the anticipated decisions from the MPC, which will shape interest rate expectations and broader investment strategies.
They added that as November trading winds down, the market could see positioning for December’s traditional window-dressing activities by fund managers, insisting that, “This presents opportunities for discerning investors to take strategic positions in fundamentally sound and resilient stocks.”
This is even as they continue to recommend that investors focus on equities with strong fundamentals and robust growth prospects to navigate the prevailing macroeconomic uncertainties.
Similarly, researchers at Cordros Securities Limited expressed belief that investors will focus on the outcome of the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the FI market. As a result, we envisage a cautious trading theme.
Trading in the Treasury bills secondary market during the week ended November 22, 2024 was bearish as the average yield across all instruments expanded by 24 basis points (bps) to 25.3 percent.
However, bullish sentiments prevailed in the NTB segment as participants looked to fill unmet bids from the week’s NTB PMA at the secondary market.
All told, the average yield contracted by 12bps to 24.0 percent at the NTB segment but expanded by 77bps to 27.2 percent at the OMO segment.
At Wednesday’s NTB auction, the DMO offered bills worth NGN610.80 billion – NGN41.89 billion for the 91-day, NGN28.56 billion for the 182-day, and NGN540.45 billion for the 364-day bills. Subscription level settled higher at NGN1.18 trillion (previous auction: NGN669.93 billion), with a bid-to-offer ratio of 1.9x (previous auction: 1.3x).
The auction closed with the DMO allotting instruments worth NGN693.05 billion – NGN35.41 billion for the 91-day, NGN16.92 billion for the 182-day, and NGN640.71 billion for the 364-day papers – at respective stop rates of 18.00 percent (unchanged), 18.50 percent (unchanged) and 23.50 percent as against 23.00 percent reported the previous week.
Meanwhile, financial analysts say they expect investors to reprice bills in line with the outcome of the MPC meeting scheduled for this week, Monday 25 and Tuesday 26 November.
Nonetheless, they highlight the likelihood of renewed demand in the secondary market bolstered by the surplus inflows expected into the financial system next week.
Proceedings in the FGN bond secondary market were mixed during the week under review, underpinned by investors who sought to take advantage of the attractive yield on the MAR-2025 bond amid sell-offs due to expectations of higher yields after next week’s MPC meeting.
Subsequently, the average yield pared by 3bps to 19.4 percent. Across the benchmark curve, the average yield declined at the short (-43bps) end, following demand for the MAR-2025 (-210bps) bond, while it expanded at the mid (+22bps) segment, driven by sell-offs of the FEB-2031 (+64bps) bond.
“The average yield was unchanged at the long end. At Monday’s PMA, the DMO offered instruments worth NGN120.00 billion to investors through re-openings of the 19.30% FGN APR 2029 (Bid-to-offer: 1.3x; Stop rate: 21.00%) and 18.50% FGN FEB 2031 (Bid-to-offer: 4.9x; Stop rate: 22.00%). The total subscription level settled at NGN369.59 billion (previous: NGN389.24 billion), with a bid-to-offer ratio of 3.1x (previous: 2.2x). “
Eventually, the DMO allotted instruments worth NGN346.16 billion across the two tenors, resulting in a bid-to-cover ratio of 1.0x.
Financial analysts at Cordros Securities say they expect market participants to take cues from the decision of the monetary policy authority next week.
Meanwhile, they maintain their short-term expectation of yields remaining elevated consequent to anticipated monetary policy administration globally and domestically and sustained imbalance in the demand and supply dynamics.
