Equities downtrend as yields tick higher

…Seplat says to release full year 2020 result on March 1

The record negative close (- 0.19percent ) on Tu e s d a y signals that the merrymaking in the stock market may be over as more investors gear up for higher yields.

Significant decline by Cornerstone Insurance Plc, Consolidated Hallmark Insurance (CHI) Plc, Prestige Assurance Plc, Wapic Insurance, UPDC REIT and others caused the market’s reroute to the south.

“It has become increasingly clear with each primary auction that the much dreaded, yet anticipated rate reversal is in play”, United Capital research analysts said in their recent note to investors.

No thanks to the insurance stocks and others, the Nigerian Stock Exchange (NSE) AllShare Index (ASI) and Market Capitalisation moved from Monday’s high of 40,571.67 points and N21.224trillion respectively to 40,494.35 points and N21.184 trillion. Investors lost N40billion at the close of trading.

The National Bureau of Statistics (NBS) released the inflation report for January 2021. The headline rate rose from 15.8percent year-onyear (y/y) in December 2020 to 16.5percent y/y.

“Yields on fixed income instruments which were depressed last year (due to the central bank’s dovish monetary policy amid the pandemic) have been on an upward trajectory in 2021 amidst strong local demand for higher yields and the need to attract foreign interest in Nigerian securities amid a dollar shortage”, United Capital analysts further stated.

They believe that the sustained surge in inflation is expected to further accelerate the reversal in the yield environment considering the huge divergence between macroeconomic realities and the yield curve.

In 5,040 deals, investors exchanged 356,430,619 units valued at N5.762billion. Gtbank, FBN Holdings, Dangote Sugar, Zenith Bank and Transcorp were most traded stocks on the Bourse.

Cornerstone led the league of losers after its share price decreased from 60kobo to 54kobo, losing 6kobo or 10percent, followed by UPDC REIT which was down from N6 to N5.4, shedding 6kobo or 10percent.

Also, the share price of CHI Plc decreased from 42kobo to 38kobo, losing 4kobo or 9.52percent. Prestige Assurance was down from 47kobo to 43kobo, after it lost 4kobo or 8.51percent, while Wapic Insurance followed from 60kobo to 55kobo, losing 5kobo or 8.33percent.

Seplat Pe t r o l e u m Development Company Plc, a leading Nigerian energy company listed on the Nigerian Stock Exchange and the London Stock Exchange said in a notice at the Exchange that it will issue its Full Year 2020 audited financial results on Monday March 1, 2021.