As investors react to GDP, earnings results
STOCK market investors have continued repositioning their portfolios following the release of a positive Gross Domestic Product, GDP, last Thursday showing fourth quarter 2021 economic growth at 4.0 percent and full year at 3.4 per cent, the highest since 2014.
Consequently, the Nigerian Exchange Limited, NGX, All Share Index, ASI, at the end of trading last weekend, closed at 47,140.48 points, up marginally by 0.1 per cent from 47,102.64 points the previous day. But on Week-on-Week, WoW, the ASI plummeted by 0.13 per cent from 47,202.30 points recorded the previous week.
In the same manner, the market capitalisation dropped by N29 billion to close at N25.406 trillion from N25.435 trillion.
Analysts have noted that investors and Fund Managers are continuing their search for greater returns on their investment, which is likely to drive funds to blue-chips as companies announce their dividend payout plans. Meanwhile, details of trading last week show that profit-taking depressed prices of large caps stocks with Seplat Petroleum (-5.9%), Guaranty Trust, GTCO (-1.5%), Access Bank (-1.4%), Airtel Africa (-0.9%) and Dangote Cement (-0.5%) driving the WoW loss. Accordingly, the Month-to-Date, MtD, and Year-to-Date, YtD, return settled at 1.1% and 10.4%, respectively.
Commenting on market development, analysts at Cordros Research said: “In the coming weeks, we expect the NGX floor to be flooded with corporate earnings as more companies publish their audited 2021 full year numbers, accompanied by dividend declarations. We believe this would provide a catalyst for buying activities even as risk-averse investors are likely to remain cautious due to medium-term expectations of an uptick in Fixed Income, FI yields. Overall, we advise investors to seek trading opportunities in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.
Commenting as well, analysts at InvestData stated: “We expect mixed trend as players digest the 3.98% growth in 2021, fourth quarter, Q4 GDP and expectation of more 2021 audited financials with corporate actions to boost positive vibes during this earnings season, amid the continued interpretation of other positive economic data released recently, in the midst of profit-taking and portfolio rebalancing.
This will result in market players targeting fundamentally sound and dividend paying stocks in hope of dividend announcements, as oil trades at $94pb, just as inflation rate moderates at 15.60%, while the International Monetary Fund is calling for hike in interest rate and further devaluation of Naira.”