Weekly Equity Market Review and Outlook

Performance in the Nigerian equity market was largely bullish this week as large-, mid- and small-cap stocks rallied; hence, the All Share Index (ASI) appreciated 1.5% WTD to close at a 3-month high of 37,944.60 points while YTD and MTD returns advanced to 41.2% and 3.4% respectively. Market capitalization increased by N205.5bn to N13.2tn, exceeding the N13.0tn mark for the second time this year. Similarly, activity level improved as average volume and value traded increased 70.8% and 14.3% W-o-W to 745.5m units and N5.2bn respectively. The week’s top traded stock by volume were WAPIC (1.4bn), FIDELITY (224.3m) and FBNH (164.6m) while ZENITH (N3.9bn), NIGERIAN BREWERIES (N3.4bn), and GUARANTY (N1.5bn) led the volume chart.

The local Bourse started the week off on a negative note, as profit taking in banking stocks - ETI (-3.0%), ZENITH (-1.0%) and ACCESS (-0.6%) - dragged the ASI 31bps lower. However, the market rebounded on Tuesday, majorly on the back of gains in NIGERIAN BREWERIES (+4.9%), STANBIC (+4.6%) and DANGCEM (+0.4%) which drove the ASI 68bps higher. In the same vein, the market performed positively on Wednesday with the ASI rising 55bps due broad-based rally across sectors. To close the week, the market sustained its positive run, up 62bps on Thursday against the backdrop of buying interest in bellwether Industrial Goods and Banking stocks - DANGCEM (+1.7%), WAPCO (+1.6%) and GUARANTY (+1.1%) and ZENITH (+0.6%).

Performance across sectors was largely bullish this week as all the indices under our coverage advanced WTD. The Insurance index led the gainers chart, up 1.5% WTD due to price appreciations in MANSARD (+4.9%) and CONTISURE (+4.5%). The Banking and Oil & Gas indices trailed, rising 1.4% apiece - buoyed by gains in FIDELITY (+21.2%), GUARANTY (+2.4%), FORTE (+15.0%) and TOTAL (+4.8%). Following closely was the Consumer Goods index which climbed 1.3% WTD as DANGSUGAR (+4.7%) and DANGFLOUR (+11.6%) rallied. The Industrial Goods index gained 1.1% to close out the positive performance, buoyed by buying interest in DANGCEM (+3.8%).

Investor sentiment, measured by market breadth, strengthened to 1.7x (38 advancers/28 decliners) from 1.4x recorded the previous week. Top performing stocks this week were FIDELITY (+21.2%), FORTE (+15.0%) and LAWUNION (+14.8%) while MOBIL (-6.1%), UPL (-5.5%) and NEIMETH (-4.9%) were the worst performers. The strong performance of the market today, which is the index rebalancing date for MSCI Frontier Market indices, perhaps indicate Nigeria had a net inflow of funds. Although we anticipate a slight pullback in early trades next week, due to profit-taking, we re-iterate our positive near term outlook for the market as fund managers continue to rebalance portfolios ahead of fiscal year-end.