Nigerian equities defy earning reports, declines 0.38%

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The equities market continued its downturn last week, declining by 0.38 percent despite the release of third quarter (Q3’19) and nine months results by some listed companies.

Investors lost N49 billion in the ensuing bearish market after the market recorded losses for four trading days during the week as the market capitalisation of all listed equities fell to d N12.826 trillion from N12.875 trillion in the previous week.

This represents 0.38 percent decrease. Also, the All Share Index, ASI, depreciated to 26,348.73 points from 26,448.62 points, representing 0.38 percent decline.

Leading corporates peg expenses below inflation trend(Opens in a new browser tab) Analysing by sectors, performance across the sectors was broadly weak, with the insurance sector leading with 1.7 percent decline, followed by the industrial goods sector, which fell by 1.5 percent and the consumer goods sector (0.6%).

The banking and oil and gas sectors were down 0.4 percent and 0.3 percent respectively. Chinenye Anyanwu, Managing Director/CEO, Dependable Securities, attributed the losing streak to profit taking, saying that it is unexpected that the market is still down despite positive financial reports from the listed companies.

He, however, said that the market would experience stability this week following the release of more results. “We experienced downturn for most of this week, which we attribute to usual profit taking.

This earning season ought to have either stabilised or moved the market up, but we have not experienced that though the results we have seen so far are not bad.

“I think that the market would stabilise this week as more financial reports come in. However, a lot of what would happen depends on what the government comes out with in terms of policy. I am beginning to believe that this government would get its ace right and as soon as they do, the market would pick up,” he said.

In their own view, analysts at Cordros Capital said: “The trend witnessed through the year is likely to persist through the final quarter of the year, although we expect pockets of gains over the final months of the year as fund and portfolio managers realign portfolios prior to the start of 2020.

“Nonetheless, we note that valuations remain attractive driven by price deterioration throughout the year.

Hence, we advise long-term investors to take positions in the market, given currently attractive valuations.”

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