The Nigerian equities market has bounced back from recent losses as it kicks off the fourth quarter of 2023 on a positive trajectory. This resurgence in market performance follows a minor decline of 0.25 percent recorded in September.
As the new quarter began on Tuesday, market analysts anticipate a renewed investor focus on the upcoming earnings season for the third quarter. Analysts predict that investors will strategically position themselves in anticipation of companies’ Q3 2023 earnings reports. They expect investors to show a preference for fundamentally strong stocks, particularly those that have demonstrated robust performance in the first half of the year.
Research analysts at United Capital advised investors to consider shares in companies such as Access Corporation, FBN Holdings, FCMB Group, Fidelity Bank, GTCO, and Zenith Bank. For the week, they expressed a bullish sentiment towards Dangote Sugar, Unilever, Flour Mills, Nigerian Breweries, and Guinness.
At the close of September, the All-Share Index and equities capitalization stood at 66,382.14 points and N36.331 trillion, respectively. However, these figures surged to 66,770.97 points and N36.544 trillion on Tuesday, indicating an upward trend in market performance. Stocks like BUA Cement, Beta Glass, UACN, FTN Cocoa, and Oando were notably in high demand.
Analysts at Lagos-based Futureview expressed their expectation of a continuation of the previous week’s sentiment trading, given the absence of significant positive catalysts. They advised investors to consider high-quality stocks with strong underlying fundamentals.
In parallel financial news, the Debt Management Office (DMO) on behalf of the Federal Government announced the offering of the October edition of the FGN Savings Bond. Subscriptions for the FGN Savings Bond, which includes tenors due on October 11, 2025, and October 11, 2026, opened on Tuesday and will close on Friday. The two and three-year tenor savings bonds are being offered at annual coupons of 11.074 percent and 12.074 percent, respectively.
Despite the recent optimism expressed by Olayemi Cardoso, the new Governor of the Central Bank of Nigeria (CBN), regarding the country’s economy and measures to stabilize the foreign exchange market, the stock market has shown resilience. Cardoso’s positive outlook contrasted with a cautious mood among investors.
The foreign exchange market opened on Tuesday following the Independence Day holiday, with the dollar trading at N1,005 in the parallel market, a slight decrease from N1,008/$ observed last Friday.
Market observers are eagerly awaiting communication from the CBN concerning the postponed September Monetary Policy Committee meeting.
With bearish sessions dominating the market last month, recording a 0.25 percent loss compared to a 3.44 percent return in August, analysts at Vetiva anticipate mixed trading sessions in the absence of significant positive drivers. Investors are now focusing on Q3 earnings reports.
Vetiva recommends shares of GTCO, Zenith Bank, Access Corporation, FBN Holdings, FCMB Group, Fidelity Bank, Lafarge Africa, Julius Berger, and MTNN, citing their undervalued status and strong fundamentals with potential returns exceeding or equal to 15 percent.
On the other hand, analysts at Meristem Research expect negative sentiment to persist in the market this week, attributing it to limited positive triggers for buying activities. They predict potential week-on-week losses for the NGXASI.
Meristem’s top stock picks for the week include GTCO with an expected return of 33 percent, Fidson (51 percent), AIICO (15 percent), and Lafarge Africa (15 percent). They acknowledge the presence of technical indicators pointing towards a negative trend but do not rule out the possibility of bargain hunting activities in attractive stocks.
The Nigerian equities market’s performance over the next quarter will likely be influenced by earnings reports and broader economic developments, shaping the investment landscape for the remainder of the year.