ARMF Bond W/H: Create Your Fixed e-Savings Acct(s) At Effective Interest Rate(s) >4% p.a….dd. 27/3/2020

=========================================================================

There may be a short-term equity bear market rally in the coming trading weeks even with coronavirus already here in Nigeria but common sense indicates that savings (a form of cash investment) is the better investment strategy at the moment as money market remains bullish (91-day FGN bills remains <2% p.a in the secondary market). Investors continue to resist these low yields even as the sell-off in the equity market continues – CASH IS KING => KING DOLLAR, not NAIRA. The ”MMM” effect has taken hold the populace with wonder banks promising impossible high returns and SEC seriously after them to reduce naïve investors’ capital losses.

We continue to recommend FGN Treasury, Savings & Infrastructure (Sukuk/Green) Bonds on the NGSE/FMDQ exchanges as a safer alternative fixed income (savings) option that can provide local non-commercial banking investors higher yields than FGN T-bills.

N.B: Your fixed e-savings account on the NGSE is actually Your CSCS Account which is directly connected to CBN S4 Platform (for safe-keeping & custody).

The bond market remains slightly bullish since 4Q2019 as rates stabilize. We will try to execute clients’ purchase/sales order mandates on FGN bonds at near the last e-o-wk (end of week) market rates as shown below:

Bond                   Tenor (Years)         Current Market Yield (%)       Q’ty In W/H (=N= in MLN)

2021                                  1                                    6.30

2022                                   2                                   7.57

2023                                   3                                   10.55

2024                                   4                                   11.16

2025                                   5                                   11.76

2026                                   6                                   12.24

2027                                   7                                   12.75

2028                                   8                                   12.90

2029                                   9                                   12.95

2030                                  10                                  13.02

2034                                  14                                  13.23

2036                                  16                                  12.98

2037                                  17                                  12.98

2049                                  29                                  13.01

N.B: A Typical FGN Savings Bond is a ”revolving” 90-day FGN Treasury Bill.

Standard fixed e-savings acct opening starts at min. N10,000 where your CSCS acct acts as your e-custodian & e-savings account within the CBN S4 platform. Under the savings product –  Upfront Interest Savings Scheme which starts at min. savings order of N100,000.00 – only FGN bonds with coupon >12.3% p.a (higher than the current inflation rate) qualify to be allocated to bond clients.

FAQ:

• What is the effective yield of a FGN bond under the upfront interest savings scheme? – it is calculated by deducting the sum of transaction charges and/or upfront funding expenses from the total yield till maturity (excl. compounding opportunity) and divided by the holding period, for example, purchased at ‘par’ NIGTB 14.2% 14-MAR-2024 (FG112024S1) and held for 5-yrs to maturity => estimated effective yield of 12.6% p.a
• What is the current 91-day FGN T-bill PMA rate ? – 2.3% p.a
• What is the current commercial banks av. savings deposit rate according to CBN ? – 3.89% p.a
• What will be the increment to the bond’s effective rate under the upfront interest savings scheme if the quarterly upfront interest(s) were compounded (re-invested) in 12-month TTM FGN bonds with coupon >7% for example? –  we estimate an increment of 0.583% p.a on the respective FGN bonds’ effective rate. Thus, compounding is an investment strategy that should never be ignored !!!
• Must i have a CSCS trading acct with TRW Stockbrokers Limited to participate? – YES !!!

=====================================================================

ARMF Bond Portfolio has opened a new sub-product called ”collaterized security margin trading” which is accessible only to bond investors under the Upfront Interest Savings Scheme starting from a min. fixed savings of N1MLN @ margin loan rate of 0.0822% per day (pro rata).

Thus, savers can now leverage on their bonds (fixed e-savings) under the upfront interest savings scheme to obtain fresh cash to invest on the NGSE equity market. A N1MLN fixed e-savings will gain access to an equivalent N1MLN margin loan => N2MLN margin account => leverage ratio (asset/equity) of 200% (2:1).

Margin Loan Window: Open

Marginable Equity  Securities: AIICO, UCAP, SEPLAT

=====================================================================

ARMF Bond portfolio re-opens its sourcing for funds upto N500MLN (buy-side investors) to be used for the following:

• to finance upfront quarterly interest payments to bond savers under the upfront interest savings scheme;
• to finance collaterized margin loans to bond savers who want to leverage on their bonds (fixed e-savings) under the upfront interest savings scheme in order to obtain fresh cash to invest on the NGSE equity market;
• participation starts from min. N50MLN at a ”negotiated” annual fixed interest rate for a 12-month revolving holding period.

========================================================================

ARMF Bond Portfolio upfront funding & margin loan rate(s) were reduced from 40% p.a to 30% p.a starting 1st January-2020 due to the local falling lending rate environment.
========================================================================

Caution – selling bonds on the secondary bond market before maturity, can either incur capital loss or capital gain !!!!

Should you require further information on how to get the best (and/or highest) annual interest on Your savings, please contact directly:

Contact Person: Ekwueme Mike Anyadibe

Mobile: 08066564748

E-mail: ekwueme.anyadibe@trw-stockbrokers.com or respartner@live.com

Skype #ID: respartner

======================================================

TRW Stockbrokers Limited
Corporate Office: 62/64 Campbell Street (Kajola House)
4th Floor Lagos Island Lagos .
234-1-7646689,234-1-2710224-5
Email: info@trw-stockbrokers.com
website: http://www.trw-stockbrokers.com

Afrinvest Weekly Bond Market Update dd. 27/3/2020….

By Afrinvest Research,

FGN Bills Market Update:

Bearish Performance Reversed as Average Yield Dips 32bps W-o-W to 3.7%

Trading activities in the Nigerian Treasury Bills (“NT-Bills”) secondary market last week began on a bullish note due to buoyant liquidity levels (N371.5bn in the positive as at Monday). This bullish run was further bolstered up by the absence of Primary Market Auction (“PMA”) and Open Market Operations (“OMO”) offers. However, as the week progressed, this demand tapered down as local investors moved to the side lines following increased concerns of the escalation of the COVID-19 outbreak in Nigeria (a jump from 36 to 84 confirmed cases by the NCDC between Monday and Friday).

Nevertheless, pockets of demand were witnessed along the short-end of the curve, as average yield contracted 40bps W-o-W to settle at 2.8%. Particularly, the 02-Jul-20 and 16-Jul-20 bills shed 115bps and 131bps W-o-W respectively. Overall, average yields across the curve dipped 32bps W-o-W to settle at 3.7% from 4.0% the previous week.

Going into the week, the CBN is expected to rollover N95.7bn worth of maturing NT-Bills at a PMA this Wednesday. In addition, we anticipate a cautious bullish sentiment in the NT-Bills secondary market amidst the continued spread of COVID-19 in the country, despite buoyant system liquidity (N520.9bn long as at Friday) along with the N95.0bn worth of maturing NT-Bills and OMO bills expected to hit the system.

We therefore advise investors to cautiously position in attractive offers along the curve, primary offers and possible commercial paper issuances.

 

FGN Bonds Market Update:

Average Yield Inches 19bps W-o-W to 12.0% due to Anticipated MPC Meeting Outcome and Bond Auction

The domestic bonds secondary market sustained its overall bearish outlook last week, while at the start of the week investors were relatively quiet in anticipation of the Monetary Policy Committee (”MPC”) meeting outcome last Tuesday and the FGN bond auction which held last Wednesday.

At the MPC meeting, the members voted to retain all policy parameters with more emphasis on the stimulus packages announced the previous week in a bid to mitigate the economic impact of the global pandemic and tumbled oil prices. As a result, average yield across the curve rose 19bps to settle at 12.0% from 11.8% the previous week, with a significant uptick witnessed on the 14-Mar-24 and 23-Mar-25 maturities advancing 165bps and 46bs respectively.

At the bonds PMA on Wednesday, the DMO’s total offer was met with significant demand with a bid-to-cover ratio of 3.6x (N50.0bn offered vs. N181.3bn subscribed). Consequently, the DMO allotted 23.7%, 29.0% and 27.4% of subscriptions on the 5-Year, 10-Year and 30-Year re-opened offerings respectively due to higher range of bids by investors.

Going into the week, we expect investors to remain wary given the expected further escalation of confirmed COVID-19 cases, however, we do not rule out some demand from investors in the secondary market as they seek to place their lost bids from the PMA. Thus, we advise investors to cautiously position in offers that inched higher along the curve.

SUSPENSION OF APRIL 2020 FGN SAVINGS BOND OFFER….

By DMO,

His Excellency, President Muhammadu Buhari, GCFR, during a nation-wide broadcast on the Coronavirus (COVID-19) yesterday announced restrictions of movement in the Federal Capital Territory (FCT), Lagos and Ogun States.

The restriction of movement was based on the need to keep the populace safe and contain the spread of the disease. As a result of this development, the Debt Management Office (DMO) wishes to inform the general public that the FGN Savings Bond Offer for the month of April 2020, which was scheduled for April 6th – 10th, 2020 has been suspended.

The DMO wishes to assure the general public that the FGN Savings Bond Offers will resume when the conditions change. It should be noted that the suspension of the April 2020 Offer will not affect Coupon Payments due to investors for already issued FGN Securities as arrangements have been made to ensure that all Coupon Payments for and redemptions of FGN Securities are made as and when due to investors’ designated accounts.

We wish to use this opportunity to call on the general public to adhere strictly to Mr President’s directives and cooperate with relevant Government Agencies that are working assiduously to contain the spread of the Covid-19.

Lockdown? No Worries! Trade from the Comfort of your home like a Pro!!

Make the Lockdown period fun by trading from the comfort of your home.

 

Be your own trader and trade live on the floor of the Nigeria Stock Exchange by hooking up to our E-Trader platform.

 

With our E-Trader Platform, you are in the market live with thousands of other traders buying and selling your stocks by yourself at whatever price you want.

 

Hook up for FREE today for the two weeks of lockdown. After the two weeks free period you will be charged an annual subscription of N2,500 per annum if you wish to continue on the platform.

 

Why not give it a try today at no cost by sending an email to:

 

info@trw-stockbrokers.com or call us on

 

Tel: 0803 800 8118

0805 810 4210

0803 716 1440

BECOMING AN ACTIVE TRADER ON THE FLOOR OF THE NIGERIA STOCK EXCHANGE IS JUST A CLICK AWAY, MAKE THAT WISE DECISION NOW AND HAVE FUN DURING THIS STAY AT HOME PERIOD!!!

 

NSE Pricelist for March 30, 2020

TRW_STOCKBROKERS_stxpricemove_d_all-2020-03-30 14_37_35.949

CORPORATE ACTIONS 2020

Julius Berger 2019FY: Robust Intrinsic Value, Good For Medium, Long-Term Positioning

Rating: Buy

Current Market Price: N23.70
Latest Cash Dividend:

Latest Scrip: 1 for 5

Year High: N24.00
Year Low: N19.90
Fair Value: N44.40

 

Introduction

• Complementing the previously released un-audited result for the year ended 31st December 2019, the management of Julius Berger has released its audited numbers, with mild changes from those previously released.
• Thus, this report observed the same result and compares the same with the audited financials from the previous year to establish the growth pattern. The valuation was established by relying on estimates from the numbers and previous projections.
• Generally, the result revealed improved performances and conservative business strategies by the management. We believe that various road constructions going on across the country immensely contributed to the growth.
• In the said result the management of Julius Berger proposed a final cash dividend of N2.75 and a scrip of one new ordinary share for every five previously held.
• The closure date is set for between June 1 and 3, 2020; while the qualification date is May 29, 2020. The said dividend will be credited to investors’ accounts on 19th June 2020.

 

JULIUS BERGER
Bourse	Nigerian Stock Exchange
Code Name	JBERGER
Sector	CONSTRUCTION/REAL ESTATE
Market Classification	Main Board
Nature of Business	Planning, Design, and Construction of Civil Engineering and Building works
Date of Incorporation	February 18th, 1970
Date Listed	September 20th, 1991
End of Accounting Year	31st December
Website	www.julius-berger.com
Registrar	Union Registrars Limited
Auditor	NexiaAgbo Abel & Co
Share Price@Relsd (N)	20.15
Earnings per Share	7.81
Intrinsic Value(N)	28.64
Share Outstanding	1,320,000,000
Market Capitalisation	26,598,000,000

 

Statement of Comprehensive Income

 

• Turnover during the period, at N266.43 billion, improved by 36.90% over that of the prior year, versus N194.61 billion in the corresponding period of 2018.
• The cost of sales grew by 44.67% from the previously reported N142.60 billion to N206.31 billion in the just-concluded year.
• Operating Profit is estimated at N19.98 billion, up from N12.08 billion in the corresponding year.
• Operating Expenses were almost stable with a mild growth of 0.54%. The Operating Expenses are currently valued at N40.13 billion, compared to N39.92 billion in 2018.
• Profit before Tax is estimated at N13.91 billion from N10.19 billion achieved at the end of the 2018 financial year.
• After taking the Tax Expenses for the year into account, the management of Julius Berger reported a profit of N8.75 billion through the year, versus N6.10 billion in the corresponding year.
• Nevertheless, due to the negative differences recorded while translating the foreign operations, the Total Comprehensive Income for the period dropped to N7.55 billion against N7.00 billion in 2018.

JULIUS BERGER
Statement of Comprehensive Income
	2019(Mill)	2018(Mill)	%CHG
Turnover	266,430	194,617	36.90
Cost of Sales	206,310	142,609	44.67
Operating Profit	19,984	12,087	65.33
OPEX	40,134	39,920	0.54
DEPRECIATION	7,280	7,848	-7.23
FINANCE COST	7,000	4,563	53.39
PBT	13,918	10,197	36.49
TAX	5,159	4,095	25.96
PAT	8,759	6,101	43.56
TOTAL COMP INCOME	7,558	7,000	7.96
Statement of Financial Position
Current Assets	160,952	152,210	5.74
Non-Current Assets	152,707	136,219	12.10
Total Assets	313,660	288,430	8.75
Current Liabilities	60,693	76,158	-20.31
Non-Current Liabilities	212,638	176,853	20.23
Total Liabilities	273,332	253,012	8.03
Net Assets	40,327	35,417	13.86
Retained Earnings	29,882	24,009	24.46
Shares Outstanding	1,320	1,320

 

Statement of Financial Position

• Current Assets at the end of the 2019 financial year are valued at N160.95 billion, a 5.74% improvement over the N152.21 billion estimated in 2018.
• Non-Current Assets, on the other hand, is estimated at N152.70 billion, versus N136.21 billion in 2018. Thus, Total Assets stood at N313.66 billion as against N288.43 billion in the corresponding period of 2018.
• Conversely, Current Liabilities at the end of the year is estimated at N60.69 billion, down from the previously estimated N76.15 billion.
• Non-Current Liabilities equally stood at N212.63 billion, same as 20.23% above the N176.85 billion in the similar year. Thus, Total Liabilities is valued at N273.33 billion against N253.01 billion.
• Net Assets are estimated at N40.32 billion, the same as 13.86% above the previously estimated N35.41 billion.
• Retained Earnings at the end of the year was worth N29.88 billion, which is 24.46% above the N24.00 billion stated in its 2018 financials.

 

 

 

 

 

 

 

 

Financial Strength

• The amount reported as Total Liabilities is the same as 87% of the Total Assets for the year. In other words, the Debt Ratio is 0.87x. or 0.66% below the 0.88x reported in the corresponding period of 2018.
• Total Debt to Equity Ratio is currently estimated at 6.78x, as against 7.14x in the corresponding year, this implies that the Total Debt Value for the year can replicate Equity 6.78 times, which1 is a lower position than the 7.14 times replicate1d for the previous year.
• Equity Ratio is also valued at 0.13x versus 0.12x. That is Equity is the same as 13% of the Total Assets Value for the year.
• Going by the current estimated beta value, the shares of Julius Berger can be described as less liquid given that its beta value is currently far below the market beta.

Financial Strength/Solvency Ratio
TICKERS	2019	2018	%CHG
Debt Ratio	0.87	0.88	-0.66
Total Debt to Equity Ratio (MRQ)	6.78	7.14	-5.12
Equity Ratio	0.13	0.12	4.70
TICKERS	2019	Industrial Average	%CHG
Beta Value	0.33	0.52	-36.54

 

Profitability Ratio

• EBITDA Margin is Currently estimated at 7.50%, versus 6.21% estimate at the end of 2018 financial year.
• Pre-Tax Margin stood at 5.22% as against 5.24% in 2018.
• Cost of Sales is estimated at 77.44% of the Turnover Figure, which is 5.68% higher than the 73.28% in the corresponding year.

PROFITABILITY RATIOS
TICKERS	2019	2018	%CHG
EBITDA MARGIN	7.50%	6.21%	20.77
PRE-TAX MARGIN	5.22%	5.24%	-0.30
EFFECTIVE TAX RATE	58.90%	67.13%	-12.25
CS TO TO	77.44%	73.28%	5.68
ROE	21.72%	17.23%	26.08
ROA	2.79%	2.12%	32.01

 

Efficiency Ratio

• Operating Expenses are estimated at 15.06% of the Turnover Value, an appreciable improvement in the management’s efficiency when compared to the 20.51% estimated in 2018.
• Turnover Value is 84.94% of the Total Assets Value, the ratio is 25.89% above the 67.47% estimated from 2018 figures.
• At 2.66x, Working Capital Turnover grew by 3.85% from the previously estimated 2.56x.
• Working Capital Ratio, within the two compared years, stood above unity and confirms the firm’s ability to settle its current liabilities with current assets as and when due, through the season.

EFFICIENCY RATIOS
	2019	2018	%Chg
OPEX TO TO	15.06%	20.51%	-26.56
TO TO TA	84.94%	67.47%	25.89
Working Capital Turnover	2.66	2.56	3.85
Working Capital Ratio	2.65	2.00	32.69

 

Investment Ratios

• Within the two periods compared, traders were seen largely revaluing the share price of Julius Berger on the floor of the exchange with the price at N20.15 (at the release of result) from N27.50 in the corresponding year.
• The estimated earnings per share of Julius Berger is N6.64 this is far above the N4.62 earned at the end of the comparable year.
• PE-Ratio is currently estimated at 3.04x compared to the previous 5.95x.
• At the price of Julius Berger when the result was released, investors had a positive yield of 32.93% as against 16.81% in the previous year-end
• The Book Value of Julius Berger is currently estimated at N30.55, higher than the N26.83 estimated from the corresponding results
• Confirming an undervalued price on the floor of the exchange, the Price to Book Value ratio stood below unity as shown in the below table.

Investment/Valuation Ratios
Tickers	2019	2018	%Chg
Price at Released	20.15	27.50	-26.73
EPS	6.64	4.62	43.56
TCIP/SHARE	5.73	5.30	7.96
P/E-Ratio	3.04	5.95	-48.96
Earnings Yield	32.93%	16.81%	95.92
BV/Share	30.55	26.83	13.86
PBV	0.66	1.02	-35.65
CAPEX/SHARE	37.36	31.54	18.47

 

Valuation

• Julius Berger’s performance is outstanding, we are of the opinion that its business is seasonal and now competitive within Nigeria, nevertheless, it continues to command the lion share in its sector. Our valuation models were also based on careful projections by our analyst, using the current results earnings along with previous year’s for projection, we have valued each unit of Julius Berger Shares at N44.40 and have rated it a Buy.

Mixed Sentiments Ahead On NGSE, As Investors Review Devts Around Covid 19 Pandemic

Market Update for the Week Ended March 27 and Outlook for March 30-Apr 3, 2020

 

The mixed trading pattern and performance continued for the second week on the Nigerian Stock Exchange (NSE) with the benchmark All-Share index extending to the third successive week of decline on low transaction volume. This is happening amidst mixed sentiments as the number of Covid-19 cases in Nigeria rose to 81 by Saturday morning, while the global figure is around 23,000 deaths from 540,000 cases, making it a real threat to the already quaking global and domestic economies.

 

Already, many central banks and governments are rolling out economic stimulus packages and measures to curtail the outbreak and mitigate the impacts of the virus on corporate organizations, businesses, and households.

 

The mixed macroeconomic indices emanating from National Bureau of Statistics and Central Bank of Nigeria are clear indications of an already challenging economy, with inflation rate already hitting a 22-month high of 12.2%, while the Purchasing Manager Index (PMI)for the month of March was at its lowest level of 31.1 points, from 58.3 points in the previous month. For fear that the virus may trigger a major economic crisis, the CBN’s Monetary Policy Committee (MPC), at its meeting on Monday and Tuesday, took note of the continued rise in domestic prices; the glut in oil supplies and low oil prices, in the wake of the global pandemic. Members also reviewed the exchange rate pressure and other domestic monetary and fiscal responses as they affect the evolving crisis. In view of these, the committee members unanimously voted to retain the Monetary Policy Rate (MPR) at 13.5%, while holding all other policy parameters constant.

 

Investdata notes that the recent technical devaluation of the Naira, the lingering border closure and the impact of the global pandemic has reduced cross-border trading resulting in inflationary pressure on everything. This might lead to hyperinflation, meaning the temptation to hold cash, for anybody, is the worst for now.

The early evidence includes the low money market rates and declining yield in the fixed income market, just as the fear of the government’s ability to redeem its bonds at maturity, especially given the shaky revenue profile already noticed. The first place you look to preserve buying power is in stocks as a way of hedging against inflation.

 

The Minister for Finance, on Friday, re-echoed our position as she warned that Nigeria might go into another recession, should the Covid-19 pandemic continue beyond the next six months as government revenue is already struggling, especially as oil is selling below its new benchmark of $30 per barrel already.

We recall that in 2016 when the nation’s economy slipped into recession after 28 years, crude oil was selling for as low as between $23 and $26 per barrel. This low revenue and high debt profile is a threat to the fixed income market, especially FGN bonds.

 

Given the current market dynamics, Investdata believes that it will make more sense looking the way of valued stocks, all of which are now selling at discount to the book value. Should the virus hit the economy harder, throwing it into yet another recession, the government will begin to default on its debts, which is a more likely today, given the huge cost of debt servicing at about 50% of its earnings as of last year,  unless some debt relief or moratorium by its creditors. It is clear that investors are more worried about the immediate economic impact than they are about fiscal mismanagement by Nigeria’s political leaders.

 

Movement Of NSEASI

The composite NSEASI, during the week under review, had a mixed trend of three trading sessions of marginally up, and two days of down market, closing the period lower, despite the seeming positive sentiments and breadth, as bargain hunting slowed down selloffs in different sectors.

 

Trading for the week started on a negative note, with the index losing all of 2.24%, followed b Tuesday’s mild recovery as the index gained 0.19%, which was halted at the midweek when the market fell marginally by 0.05%. This was not sustained on Thursday, as the NSE wiped off the previous day’s loss with its 0.13% gain on increase buying interests in financial service stocks which were sustained on Friday when the index chalked 0.48%, reducing the week’s loss to 1.52%, as against the previous week’s 2.35% decline.

 

Consequently, the All-Share Index lost 336.65basis points, after opening at 22,198.48bps, touching an intra-week low of 21,663.32bps from its high of 22,208.81bps on mixed sentiments, low traded volume on indecision among traders. The index closed the week at 21,861.78ps, after breaking down the 22,000 psychological line on a lower traded volume, when compared to the previous week. Market capitalization dropped by N174.82bn, closing at N11.39tr, from the opening value of N11.57tr, representing a 1.51 % value loss in a week when additional shares of Golden Guinea Breweries were listed. This was just as eTranzact announced a rights issue for N7bn from existing shareholders.

 

Last week also, trading was fully from remote platforms, as part of measures to curtail the spread of the deadly Coronavirus by the NSE management, just as few companies released their 2019 audited results with dividend announcements. The exchange equally announced an extension of the submission deadline for the 2019 audited financials by two months.

It was a mixed trading and bargain hunting as kobo stocks dominated the week’s advancers table, amidst the seeming improvements in buying interests in value stocks selling below their intrinsic worth during the period. This reflected in the market breadth as advancers outnumbered decliners in the ratio of 34:30, even as the impetus behind the week’s performance was weak, with Money Flow Index slipping to 32.34bps, compared to the 37.57bps of the previous week.

 

Transaction volume was low, indicating the wait-and-see attitude of market players, while discerning investors took advantage of the low prices in the midst of panic selling and confusion to reposition their portfolios, as earnings reporting season has been extended to May. The mixed sentiment during the period was confirmed by Investdata’s Sentiment Report for the week showing 36% ‘buy’ volume, and 64% ‘sell’ position, on a transaction volume index of 0.96.

 

Mixed Sectoral Indices

The sectoral indexes for the week were largely bearish,  except for the NSE Insurance and Banking indexes which closed higher by 3.25% and 2.06% respectively, while the NSE  Consumer Goods led the decliners after shedding  8.05%, followed by the NSE Oil/Gas and Industrial Goods that dropped by  2.21% and  0.52% respectively.

 

Market activities in terms of volume and value for the week, were down by 48.21% and 54.18% respectively, as investors traded 1.45bn shares worth N14.92bn, as against the previous week’s 2.8bn units valued at N32.56bn. Volume for the week was driven by trades in financial services stocks, especially Zenith Bank, Guaranty Trust Bank, and FBNH.

 

Wapic Insurance and Cutix were the best-performing stocks for the week, as they topped the advancers chart, after gaining 23.81% and 20.69% respectively, closing at N0.26 and N1.40 per share on market forces and sentiments.  On the flip side, Nigerian Breweries and Africa Prudential lost 15% and 11.17% respectively, closing at N25.50 and N3.42 per share on panic selloffs.

 

Market Outlook

We expect the mixed performance to continue depending on developments around the Covid 19 pandemic in the new week and implementation of the government’s economic stimulus packages to mitigate the effects of the virus. Already, we note that the manufacturing sector, among others in the economy, is already depressed by happening in the economy.

 

Also, don’t forget to play defensive stocks among the many fundamentally sound companies that remained depressed, making them attractive for bargain hunting by market players. This has also resulted in significant improvements in Dividend Yields of stocks, even as we note the fact that fund managers who held cash before now, may have to rethink the strategy and go for value stocks with high upside potentials.

 

This is just as more liquidity flow to high Dividend Yield stocks with sound fundamentals, a situation that will also be based on the seemingly positive outlook for the domestic economy, despite the mixed outlook for 2020 from various analysts.

 

While discerning investors should take advantage of the current low stocks valuation to position for the medium to long-term, it is noteworthy that the Nigerian equity market is selling at a discount and therefore offers high upside potential.

 

We should, however, not overlook the possibility of a bargain-hunting motive supporting positive performance, especially with many fundamentally sound stocks remaining underpriced. With a dividend yield of major blue-chips continuing to look attractive in recent weeks, we expect speculative trading to shape the market’s direction, despite the seeming mixed outlook.

 

Ambrose Omordion