- Global stock markets record a rebound
In one week on the Nigerian bourse, about N850 billion of investors’ money was wiped- off due primarily to pressured sell-offs in banking and industrial goods sector stocks.
The outcome was a reflection of the ongoing interplay of market dynamics amidst heightened volatility. Additionally, the market capitalisation saw a corresponding decrease of 1.51 percent week-on-week, dropping to N55.13 trillion, with a total of N846.53 billion being wiped off from the market.
As a result, the year-to-date (YTD) return for the market now stands at 29.86 percent.
This downturn further depressed the benchmark index, with low trading volumes and negative market internals highlighting both the market’s weakness and potential opportunities for astute investors. This trend unfolded as market participants digested the recently released July 2024 Consumer Price Index (CPI) data, which indicated a deceleration in Nigeria’s headline inflation to 33.40 percent.
This period also coincided with expectations surrounding interim dividend declarations. By the end of the trading week, bearish sentiment had firmly gripped the All-Share Index (ASI), which fell by 1.51 percent on a week-on-week basis, closing at 97,100.31 points.
Trading activities throughout the week were notably subdued, with a lacklustre market sentiment prevailing. The weekly traded volume dropped by 25.8 percent week-on-week to 1.99 billion units, while the weekly traded value declined by 17.9 percent to N40.19 billion.
Furthermore, the number of weekly deals fell by 7.24 percent, amounting to 44,017 trades. This downturn was exacerbated by negative market breadth, as evidenced by the fact that the number of gainers (38) was outstripped by the number of losers (46).
In terms of sectoral performance, the picture was largely positive, except for the NGX-Industrial Goods and NGX-Banking sectors, which retreated by 5.16 percent and 2.28 percent week-on-week respectively, as profit-taking exerted downward pressure on these sectors in the context of ongoing portfolio realignments.
In contrast, the market pullbacks witnessed during the week provided strong buying opportunities that buoyed investor sentiment.
This positive sentiment was reflected in the performance of certain stocks, leading to gains in the NGX-Oil & Gas (5.25%), NGX-Insurance (0.79%), and NGX-Consumer Goods (0.37%) indexes.
As the week drew to a close, specific stocks stood out as top gainers. RTBRISCOE led the chart with a 33.9 percent increase, followed by TOTAL (20%), JBERGER (18%), GUINEAINS (18%), and UPL (12%), all benefiting from positive price movements during the week.
Conversely, stocks such as CUTIX (-18%), BUACEMENT (-15%), OANDO (-12%), LEARNAFRICA (-11%), and CHAMS (-10%) were among the top losers, primarily due to sell-offs by investors.
The market continues to trade within the value area, presenting entry opportunities for discerning investors and savvy traders.
Transaction volume patterns and support levels are signaling further buying opportunities, even as market participants look ahead to the forthcoming release of the Q2 2024 GDP report, along with audited half-year earnings and interim dividend declarations.
Consequently, Cowry Research anticipates a mixed performance in the coming week, driven by ongoing portfolio rebalancing and profit-taking activities. Nevertheless, we continue to advise investors to focus on fundamentally sound stocks.
On the global scene, stocks rebounded this week as signs of easing inflation and stronger-than-expected economic data (retail sales and jobless claims) eased recession concerns and fueled the optimism for a potential interest rate cut by the US Federal Reserve in September.
As of the time of writing, US equities (DJIA: +2.7%; S&P 500: +3.7%) were on course for a weekly gain as the inflation (2.9% vs June: 3.0%) and retail sales (+1.0% vs June: -0.2%) data were assessed as positive signals for a potential ‘soft-landing’ for the economy.
Similarly, European equities (STOXX Europe: +2.4%; FTSE 100: +1.9%) were on track to close higher, buoyed by the positive momentum on Wall Street and better-than-expected UK economic data (GDP and inflation). The Asian markets also mirrored the gains on Wall Street led by the Nikkei 225 (+7.9%) as Japan’s GDP growth (July: 0.8%) exceeded the market’s expectation (0.5%), signaling a robust economic recovery. Likewise, the Chinese market (SSE: +0.6%) recorded modest gains, driven by hopes for further stimulus measures from Beijing despite mixed economic data. Finally, the Emerging (MSCI EM: +0.7%) and Frontier (MSCI FM: +0.9%) market indices closed positively underpinned by bullish sentiments in China (+0.6%) and Vietnam (+2.3%), respectively.
