Equities’ pricing: Policy consistency will sustain uptrend in H2

By Nkiruka Nnorom

AS the third quarter, Q3′ 17, enters into the third week, analysts in the capital market have said that consistency and sustainability of policies that are able to deliver solid macro-economic recovery in the near term will continue to keep the market in the upward trajectory.

Among some of the policies and developments that propelled a bullish second quarter, Q2’17, which must be sustained, according to them, include 2.0 million barrels per day oil output, strong external reserves, which now stands at $30.0 billion, full operation of Forcados export terminal and the prospect of an economic recovery. The more impactful was the introduction of the Investors and Exporters, I&E FX window by the Central Bank of Nigeria, CBN.

Specifically, analysts at United Capital Plc, a Lagos-based investment banking firm, said that a medium to long-term stability in the local economy would be critical in driving sentiment amidst impressive corporate earnings.

“We expect sentiment to remain upbeat and from a technical stand-point, current valuation provides attractive bargains.

“At 32,827.98 points as at July 11, 2017, technical analysis suggests that the All Share Index, ASI, may rally even higher when compared to the medium term resistant point of 38000 – 40000 points if news flow in the domestic economy continues at the pace witnessed in Q2-17,” they said.

They however, observed that risks to further upside remain on the horizon amid unsteady oil prices, political uncertainty and capital flow reversal. Last week, investors rallied N273 billion gains as the market recorded five straight days of bullish activities.

The twin indicators were up 2.4 per cent on the back of impressive returns on 48 equities with Neimeth International Pharmaceuticals Plc, Unity Bank Plc, Forte Oil Plc, Avon Crowncaps and Containers Plc and N.E.M Insurance Plc leading the pack with 24.62 per cent, 19.67 per cent, 15.34 per cent, 14.56 per cent and 14.14 per cent appreciation respectively. Sentiment was also strong within the entire market as all the five sectoral indices rallied higher compared to the previous week.

The banking sector galloped the most, recording 6.10 per cent returns, propelled by 10.04 per cent and 8.43 per cent gains in Ecobank Transnational Incorporated, ETI Plc and Access Bank Plc respectively.

The industrial goods sector followed suit, rising by 2.94 per cent; the oil and gas sector driven by gains in Forte Oil Plc and Mobil Oil Nig. Plc, returned 2.31 per cent, while insurance sector and the consumer goods sector recorded 0.88 per cent and 0.71 per cent appreciations respectively.

 

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