Analysts expects monetary stimulus to spur market
By Peter Egwuatu
The persistent liquidity crunch in the Nigeria’s foreign exchange market as well as the steady rise in the reported cases of Coronavirus, COVID-19, have stalled recovery in the nation’s stock market.
However, despite the weak sentiments investors gained N73.1 billion Week-on-Week, W-o-W, as the Nigerian Stock Exchange, NSE, market capitalisation rose to N12.7trillion.
Analysts envisaged that the federal government’s monetary stimulus may spur activities in the market, though the rising COVID-19 cases remain a threat to market recovery in the short term period.
Reacting to the market situation, analysts at Cordros Capital Limited, said: “Our view continues to favour cautious trading owing to the fact that the gains recorded last week were not broad-based. We reiterate that risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”
Commenting analysts at Afrinvest Research said: “In the coming week, we expect more corporate earnings releases to dictate the performance of the market.”
In their own comments, analysts at United Capital Limited, stated: “At the secondary market, yields on all the outstanding and new Eurobond Sub-Sahara Africa, SSA notes re-priced higher in first quarter, Q1-2020, owing to the synchronized risk-off sentiments fueled by the COVID-19 pandemic and the uncertainties involving the impact that it will have on the economy. “However, the large-sized stimulus package unveiled across the developed market and recent recovery in economic activities, had since refueled risk-on sentiments by foreign investors.
“Looking ahead, we believe there is still room for new Eurobond issuances in second half, H2-2020. Although this will depend on the level of improvement seen in both the external and domestic space, our optimism is buttressed by the recent recovery in foreign investors ‘appetite for SSA Eurobond at the secondary market.”
Meanwhile, analysis of trading last week showed that a one-off gain on Thursday, driven by a surge in Dangote Cement (6.5%), led the NSE to its largest weekly gain in seven weeks. Thus, the NSE All-Share Index, ASI advanced by 0.6% W-o-W to 24,427.73 points, also supported by gains in MTN Nigeria (1.7%) and STANBIC IBTC (3.5%).
Notably, the Month-to-Date and Year-to-Date, YtD losses moderated to -0.2% and -9.0%, respectively.