Bulls Reign Supreme as Global, NGX and OTC Market Advance During The Week
Global Stocks Gain as investors track earnings, economic data
This week, the bulls advance, as eleven (11) out of the fourteen global market indices under our coverage declined, while three (3) declined. The positive performance was due to some stellar corporate earnings, and stronger-than-expected U.S Job reports, amidst continued concerns over the Delta variant of the Coronavirus pandemic, impacting a budding economic recovery.
According to the job report released on Friday by the U.S Labour Department, the Non-farm payrolls increased by 943,000 jobs last month, the most in almost a year, while the unemployment rate dropped to 5.4%. Also, the Labour Department reported that 385,000 Jobless claims has been filed last week, while layoff dropped to the lowest in more than 21 years of last month.
Furthermore, the Bank of England (BoE) on Thursday left its monetary policy unchanged but warned of a more pronounced figure of above-target inflation.
Consequently, all the major U.S indices under our coverage, DJIA Index, S&P 500 Index, and Nasdaq Composite increased by 0.78%w/w, 0.94%w/w, 1.11%w/w respectively, following some stellar corporate earnings reports,
Similarly, all the major indices under our coverage in Europe; the France CAC 40 and UK FTSE 100, and the German DAX Index advanced by 3.09%w/w, 1.29%w/w, and 1.40%w/w respectively, as investors grow confident in the region’s economic recovery and earnings growth.
In the same vein, all the major indices under our coverage in Asia, the Japan Nikkie 225, Hong kong HANG SENG, China Shanghai Composite, and India S&P BSE Index grew by 1.97%w/w, 0.84%w/w, 1.79%w/w, and 3.22%w/w respectively, despite the soaring cases of the Covid-19 Delta variant and travel restrictions in some part of the region.
However, all the major indices in the emerging markets under our coverage, South Africa FTSE/JSE, Egypt EGX 30, and Argentina Merval Index receded by 0.43%w/w, 0.18%w/w, and 0.22%w/w respectively, save for Brazil Bovespa Index that gained 0.83% w/w to close the week.
In the coming week, we expect investors to react to the positive U.S Jobs report, which indicates the global economy is still on track for recovery. However, soaring cases of the Covid-19 Delta variant in some parts of the globe could dictate investors’ sentiment.
Four Days of Bullish Sentiment Sends Local Bourse Green
The Nigerian Bourse ended w/w trading on a positive note, as the NGX-ASI appreciated by 0.68% from 38,547.08 points to close at 38,810.75 points. Positive market performance was recorded in four of the five trading sessions.
Investors gained about N137.4 billion, as the Market Cap. grew from N20.08 trillion in the previous week to N20.22 trillion.
At the end of the week, the Insurance, Oil & Gas, and Banking, Consumer, and Industrial Goods Sector all receded by -1.65%,-0.61%, –0.58%, -0.48%, and -0.22% respectively.
According to the NGX Weekly Summary Report, CUTIX PLC emerged as the best performing stock for the week with a w/w gain of +17.95%, while NEIMETH emerged as the worst-performing stock with a w/w loss of -14.29%.
A total of 989.593 million shares worth N8.183 billion in N8.183 billion in 19,617 deals were traded this week by investors on the floor of the Nigerian Exchange Group (NGX), as against a total of 1.37 billion shares worth N11.82 billion in 22,982 deals last week.
In terms of corporate action, MEYER PLC, NNFM PLC, and CHIPLC proposed an interim dividend of N1.50, N0.15, and N0.02 respectively.
Twenty-three (23) equities appreciated at price during the week, lower than Thirty-seven (37) in the previous week. Thirty-six (36) equities depreciated in price, higher than Thirty-five (35) equities in the previous week, while ninety-seven (97) equities remained unchanged, as against eighty-four (84) equities recorded in the previous week.
We expect mixed sentiment to continue in the coming week, as investors continue to react to the released earnings report, and yield movement in the fixed income market.
Marginal gain of 0.04%w/w halts bearish sentiment of two consecutive weeks
Transactions on the NASD OTC Security Exchange Market closed on a positive note to halt the bearish sentiment of two consecutive weeks, as the NASD Security Index NSI grew by 0.04%, representing 0.31 basis points to close at 752.81 points against 752.50 points in the previous week. Investors gained N270 million for the week, as the NASD OTC Market Capitalisation closed at N654.32 billion for the week.
Total trading activity for the week was valued at N1.05 billion in 102 deals. The most traded stocks on the exchange for the week are; SDNGXGROUP, SDCSCSPLC, SDFCWAMCO, SDNDEP, SDNIPCOPLC, SDFOODCPT, SDWAPPLC, SDMIXREAL, SDFSTTRUSTMB, and SDAFRILAND.
SDWAMCO emerged top gainer for the week, with a maximum price appreciation of (+5.79% N127), while SDWAPPLC emerged top loser for the week with a price depreciation of (-19.32% to N0.71).
This week’s price appreciation was a result of buy-sentiment in medium and large capitalized stocks among which are; SDWAMCO(+5.95% to N127), and SDNGXGROUP(+0.24% to N16.53).
However, the market breadth close negatively, recording 3 losers and 2 gainers.
We expect the NASD OTC Market to trade in a tight range in the coming week.
This week’s activities on Treasury Bills were limited to the secondary market, as no new instruments were offered.
System liquidity indicators closed higher, as Overnight (O/N) and Open Buy Back (OBB) rose to 20.50% and 20.00% respectively, from 7.75% and 7.50% in the previous week.
Consequently, the average yield of the secondary Treasury Bills market declined by 17bps to 5.63%, as against 5.90% recorded last week, due to selling pressure.
Similarly, the average yield on the secondary Open Market Operation (OMO) closed lower to settle at 7.78%, representing a 91bps decrease against last week.
In the coming week, we expect the money market to trade in a tight range as investors focus on developments in the NTB auction where the apex bank is scheduled to roll over N51.49bn worth of bills. Looking at the trend from the previous NTB auctions, we expect the stop rate for the shorter tenors to remain the same, while the stop rate for the longer end of the curve recedes further due to huge buy-interest.
This week, the DMO on behalf of the Federal Government of Nigeria offer for subscription the 2-Year and 3-Year Savings Bond with an interest rate of 8.864% and 9.864% respectively, against the interest rate of 8.35% and 9.35% in July 2021.
Furthermore, the average yield on the secondary bond market closed on a bullish sentiment to 9.06%, as against 9.25% recorded last week, representing a decline of 19bps.
We expect the bond market to trade in a tight range, as investors monitor yield movement.
Foreign Exchange Market
At the I&E FX window, the Naira depreciated by 0.01%(w/w) to close on Friday (06/08/2021) at ₦411.50/USD against ₦411.44/USD from last Friday’s position. However, at the BDC, Naira appreciated by 1.38%(w/w) to close on Friday (06/08/2021) at ₦508/USD against ₦515/USD from last Friday’s position.
The Foreign Reserve grew $185.18 million to the level of $33.57 billion (05/08/2021) from $33.38 billion (29/07/2021).
The Brent Crude price depreciated by $4.71/barrel (w/w) to $70.70/barrel this Friday(06/08/2021) as against $75.41/barrel last Friday (30/07/2021), representing a drop of 6.66% (w/w). Similarly, Nigeria’s Bonny Light also decreased by $4.55 to $69.77/barrel on Friday(06/08/2021) from $74.32/barrel (30/08/2021), representing a drop of 6.52% (w/w)
Source: GTI Research