Market Update Jan 9
It is obvious in Monday’s trading and that of last Friday, that dividend paying stocks are rebounding with speed, especially since last week when their directors started notifying the investment community through the Nigerian Stock Exchange (NSE) of their impending board meetings in a fortnight.
The meeting, they announced, would among others, approve their 2016 audited results and recommend a dividend for the period as part of corporate governance and to enhance transparency. The idea is to avoid insider trading such that associates of these companies do not enjoy undue advantage by trading in its shares.
The lingering January effect and impending earnings season will determine market direction in the coming weeks, especially as investment and fund managers reposition their portfolios in line with realities on the ground. One of the most evident of these is that many companies listed on the exchange are not likely to pay dividend this year given the fact that even those who survived would describe 2016 as yet another “Annus horibilis.” As a sign of this, many companies that managed to close the year green are cutting dividend payout as result of weak earnings while only few of the 219 listed companies recommend juicier dividend in this season than in the preceding one.
At the beginning of this year, after the Santa Claus rally or market correction, low priced equities tend to deliver gains especial when speculator-prone sectors are doing well.
Also, looking for stocks experiencing short-term pullback in a long-term uptrend is how to play this period in preparation for the coming earnings season which is a major one in our market as most stocks have December year-end.
Back to the market on Monday, the equity market experienced a surge, as investor appetite for risk increased amidst the low assets valuation. Activities and trading pattern suggests affinity towards dividend paying stocks.
In Investdata, we believe that Investors are taking position in stocks ahead of expected release date for December year-end companies.
As a result, the composite NSE All-Share index gained 328.83 points to close at 26,580.22 from the 26,251.39 it opened for the day, representing a relatively strong 1.25% growth, just as market capitalisation, which opened at N9.03 trillion closed at N9.15 trillion.
Consequently, the NSE All Share Index Year-to-Date negative returns reduced to 1.06%, just like market capitalisation.
Market breadth was mixed but almost at par, as the number of advancers outpaced decliners in the ratio of 19:16 to continue its bull transition on the floor of the exchange.
Volume of trades was down by 0.56% to 209 million shares worth N1.43 billion from the previous session of 210 million units valued at N1.51 billion.
Transactions in the shares of Fidelity Bank, ACCESS, Ucap, FBNH and UBA, topped the activity chart as most traded equities by volume.
We observed across deal of 18.5 million share at N6.50 involving foreign investors in Access Bank and in Unilever 3 million share at N36 involving an off shore investors Access bank 3.66%, Ucap 9.60%, Plc, UBA (4.91%), Guaranty (+4.50%) are the top advancers, while 7UP led the decliners table with a 5% loss to close at N122.55.
The current trend is likely to continue till mid-week’s trading before profit booking will hit the market for a pullback that will create another trading and investing opportunity.
Stocks to Buy
UACN, FCMB, AIICO, UBA, DANGOTE SUGAR AND ZENITH BANK
By Ambrose Omordion
