Analysts bullish on equities outlook

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  • Banking stocks jolt market back to life

By Nkiruka Nnorom


The equities market has been jolted back to life after over two months of depressed trading and bearish run following bargain hunting in banking stocks as the first quarter (Q1) earning season kicks-off last week.

This is even as investment analysts have projected more bullish outlook against the background of the anticipated positive earning releases by the quoted companies.

According to  analysts at Cowry Asset Management, investors would likely tweak their positions in favour of companies that record impressive earnings with the possibility of high dividend payout ratio as the results are released.

They,  however,  said that domestic equities market would trade sideways even in the midst of Q1 2021 financial results release.

Also,  analysts at Cordros Capital said that as the market is flooded with financial results,  investors would be looking for clues on how corporate earnings would evolve within the year given the expected improvement in macroeconomic conditions.

They, therefore, said that the local bourse would likely close positive this week over the expectation of decent earnings releases across board to temper selling activities stoked by the rising yields in the fixed income market.

Meanwhile, bargain hunting in large-cap stocks, especially the banking stocks drove activity in the local bourse ahead of the Q1’21 financial results release last week.

Specifically, the Lafarge Africa Plc soared by  8.8 percent, followed by four banking stocks – Stanbic IBTC Holdings Plc (+8.7%), United Bank for Africa (UBA) Plc (+7.9%), Guaranty Trust Bank Plc (+7.0%), and Zenith Bank Plc (+3.7%) as a result of the renewed interest.

Consequently, the All Share Index (ASI)   advanced by 1.3 percent to close at 39,301.82 points. As a result, the year-to-date loss moderated to -2.4 percent. Similarly, the market capitalisation of all listed equities rose by N258 billion or 1.3 percent to N20.568 trillion.

Activity levels were stronger than the prior week, as trading volumes and value rose significantly by 26.2 percent and 290.6 percent to 1.602 million shares and N42.142 billion respectively.

Further analysis showed that the sectoral performance was also positive as all the sectors recorded gains.

The banking sector led the pack, rising by 4.8 percent, followed by the consumer goods (+1.0%), industrial goods (+0.5%), insurance (+0.4%) and oil and gas sector (+0.3%).

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