Buying Interest in Bank Drives Nigerian Bourse Higher

The local equity market halted its 3 day bearish trend as the benchmark index closed positive at the end of Thursday’s trading session, up 0.4% to settle at 27,598.34 points on account of buying interest in GUARANTY(+5.1%). Bargain hunting in SEPLAT (+2.0%) and INTBREW (+5.0%) also contributed to the All Share Index gains. Consequently, market capitalization increased to N9.5tn as investors gained N41.3bn. In the same vein, activity level improved from a 6months low as volume and value traded spiked 36.6% and 577.2% to berth at 111.9m units and N4.0bn respectively.

Bullish Sentiment across Sectors
Performance across sectors was bullish as all indices closed in the green. The Banking index (+1.8%) appreciated the most, mainly on account of a rally in GUARANTY (+5.1%) following the release of its Q3:2016 earnings result yesterday. Guaranty’s gross earnings and Profit before Tax (PBT) grew 43.6% and 53.0% respectively in the period, supported by FX-revaluation gains as well as Net Interest Income which came in above market estimate.  The Oil & Gas index trailed as it strengthened 0.9% as a result of bargain hunting in SEPLAT (+2.0%) and OANDO (+1.4%). Similarly, the Consumer Goods and Insurance indices rose 0.1% apiece on the back of renewed appetite in INTBREW (+5.0%), GUINNESS (+1.4%), NEM (+5.0%) and AIICO (+3.4%). Marginal appreciation in WAPCO (2bps) drove the Industrial Goods index 1bps higher.

Investor Sentiment Strengthens
Investor sentiment strengthened today as reflected in the breadth which settled at 1.1x (from yesterday’s 0.6x) after 16 stocks advanced against 14 declining stocks. The gainers’ chart was topped by GUARANTY (+5.1%), NEM (+5.0%) and INTBREW (+5.0%) while TRIPPLEG (-4.8%), AFRIPRUD (-4.8%) and NEIMETH (-4.7%) led the losers’ list. Given the halt in negative trend in market performance as a result of GUARANTY’s positive earnings surprise, we expect sentiment to remain driven by earnings result as investors remain cautious against weak macro backdrop.