Positive Sentiment Buoys Performance across Markets

Global COVID-19 cases rose 4.8% to 88.6 million this week while the death toll rose 3.9% to 1.9 million. The US remains the most infected country with 22.1 million cases. Also, daily cases in the UK (2.9 million) has been on the rise following the spread of a new variant which has prompted the immediate dispensation of vaccines and lockdown measures. Although the vaccine has brought a glimmer of hope, a second wave with new variant dampens the prospects of a fast-paced economic recovery. Elsewhere, the confirmation of US President-elect Joe Biden election victory and a Democrat-led Congress buoyed sentiment as there is prospect for a smooth path for more stimulus and economic recovery.

Across the developed markets, the performance was impressive as all the indices covered gained. The US S&P 500 and NASDAQ indices rose 1.8% and 2.3% w/w respectively following the prospects of more stimulus as Biden’s victory is upheld. Similarly, Germany’s XETRA DAX, France’s CAC 40 and UK’s FTSE All Share indices appreciated 2.6%, 2.7% and 5.6% w/w respectively as recovery optimism lifts sentiment. Also, Hong Kong’s Hang Seng  and Japan’s Nikkei 225 indices closed the week higher by 2.4% and 2.5% w/w respectively. 

Performance in the BRICS markets mirrored the developed markets as all indices appreciated w/w. South Africa’s FTSE/JSE All Share and Russia’s RTS indices led the pack, up 6.9% and 6.0% w/w respectively as stocks benefited from hopes for more US economic stimulus. Likewise, Brazil’s Ibovespa and China’s Shanghai Composite indices posted 3.2% and 2.8% gains w/w respectively while India’s BSE Sens index advanced 1.9% w/w.

Across financial markets within our African coverage , performance was also positive although Nigeria's ASI and Morocco’s Casablanca MASI indices lost 0.4% and 0.3% w/w respectively. Ghana’s GSE Composite index gained the most, appreciating 2.1% w/w. Similarly, Kenya’s NSE 20 and Egypt’s EGX 30 indices rose 1.5% and 0.8% w/w respectively. Lastly, Mauritius' SEMDEX index increased 0.4% w/w. 

The sentiment in the Asian and Middle East markets under our coverage was similar as all indicators gained. Thailand’s SET and Turkey’s BIST 100 indices recorded the highest gain, up 6.0% and 4.3% w/w respectively. Likewise, Qatar’s DSM 220 and UAE’s ADX General indices gained 2.3% w/w apiece. Finally, Saudi Arabia’s Tadawul ASI indices climbed 0.5% w/w. 

Domestic Equities Market: Off to a Bearish Start

The domestic equities market opened the first week of the year on a bearish note as the All-Share index was down 0.4% w/w to settle at 40,120.22 points. The negative performance was on the back of losses in DANGCEM (-8.1%), MTNN (-2.8%) and OANDO (-4.1%). Consequently, market capitalisation declined by ₦78.7bn to close the week at ₦21.0tn while YTD return stood at -0.4%. Activity level varied as average volume climbed 32.7% to 678.8m units while value fell 54.1% to ₦4.0bn. The most traded stocks by volume were TRANSCORP (107.0m units), AIICO (97.2m units) and ACCESS (69.3m units) while ZENITH (₦1.7bn), GUARANTY (₦1.3bn) and NIGERIAN BREWERIES (₦780.0m) led the value chart.

Performance was bullish across sectors as 4 of 6 indicators that we track closed in the green, save the Industrial Goods and AFR-ICT indices which lost 0.6% and 0.5% w/w respectively due to losses in DANGCEM (-8.1%) and MTNN (-2.8%). Conversely, the Oil & Gas and Insurance indicators were the best performers, up 13.2% and 9.5% w/w respectively, buoyed by buying interest in SEPLAT (+23.3%) and NEM (+28.5%). Lastly, the Banking and Consumer Goods indices closed 3.2% and 2.6% higher w/w respectively on the back of gains in ZENITH (+3.4%), GUARANTY (+2.0%) and INTBREW (+16.0%). 

Investor sentiment as measured by market breadth (advance/decline ratio) strengthened to 2.2x from 0.9x recorded last week as 47 tickers gained against 21 losers. BOCGAS (+32.2%), NEM (+28.5%) and SEPLAT (+23.3%) led the top gainers while DEAPCAP (-12.0%), ROYALEX (-11.5%) and DANGCEM (-8.1%) led the decliners. We expect to see bargain hunting in the coming week.