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Stocks see first negative close this week after APC primaries

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Nigeria’s stock market recorded its first loss this week, declining by N41billion or 0.14 percent on Wednesday, June 8. The record negative on the Bourse comes on the heels of a long-drawn Presidential primaries contest by the nation’s ruling All Progressives Congress (APC) which Bola Ahmed Tinubu finally emerged as the party’s Presidential candidate.

Financial Derivatives Company (FDC) analysts in their June 3 presentation at LBS Breakfast Club had expected the NGX to maintain horizontal – downward trend, adding that the institutional investors will rebalance their portfolio for attractive fixed income yields.

“Telco stocks will continue to rally. Banking stocks will drift as they struggle with market share and cut costs. Expect an increase in their cost of funding and impairment. Corporate margins will shrink due to expensive borrowings,” FDC analysts added.

Amid the kick-off of Nigeria’s longest election cycle, traders on its Bourse in 4,265 deals exchanged 248,958,637 shares valued at N1.861billion.

Currently, foreign inflows into the Nigerian equities market remain low. Investors had after a-two day continued to trade cautiously in the absence of major catalysts to spur activities on Custom Street.

“We expect the selloffs witnessed in the market in the past weeks to persist, as investors take profit on stocks that have recorded decent gains previously. We also do not see any significant positive trigger to spur buying interest in the market,” Meristem analysts had said in a June 6 note to stock buyers.

Read also: NGX says to deepen collaboration with ICAN for market development

Champion Breweries led the league of market’s decliners after losing 38kobor 9.79percent, from N3.88 to N3.50; followed by NEM Insurance which decreased from N4.20 to N3.85, losing 35kobo or 8.33percent; and E-Tranzact International which dropped from N3 to N2.71, losing 29kobo or 9.67percent. Cutix on the other hand led the advancers after its share price increased from N2.61 to N2.74, adding 13kobo or 4.98percent.

As the market halted two-day gaining streak to close in red, its performance indicators – the Nigerian Stock Exchange (NGX) All Share Index (ASI) and Market Capitalisation decreased from preceding day’s highs 53,270.88 points and N28.718trillion respectively to 53,193.98 points and N28.677trillion. The market’s year-to-date (YtD) return decreased to 24.53percent.

Transcorp, Fidelity Bank, FBN Holdings, Japaul Gold and Chams were most traded counters on the nation’s exchange.

“Although we anticipate continued profit taking, we also expect investors to begin bargain hunting by cherry picking fundamentally sound stocks at a discount. We advise investors to buy stocks on our recommendation list at current prices ahead of the H1-2022 earnings and dividend season,” Lagos-based analysts at United Capital had said in their June 6 note.

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