Disquiet over recovery as markets reel from Russia-Ukraine face-off
Local equity analysts foresee positive week after price gains in Seplat, Eterna, pushed NGX-ASI higher Market investors gained N101.3bn in 5 days
WITH THE PANDEMIC effect still in play, global equities analysts think the escalation of the current geopolitical tension could erode parts of the gains from the global economic recovery in 2021 in the near term. In addition, there is the preaching that the sanctions announced by several European Union (EU) economies and the US on Russia, the world’s third-largest producer of crude oil with about 10 percent share, could lead to sustained gains in oil prices.
On the strength of the above narrative, the international equities markets took a beating as the rise in the tension between Russia and Ukraine led to broad-based sell-offs across major indices.
Thus, Russia’s RTS index plunged, losing more than 30 percent week on week, while oil prices surged past $100 per barrel for the first time since 2014.
In the US, the Nasdaq and S&P fell 0.5 percent and 1.4 percent week on week respectively, while Japan’s Nikkei 225 and China’s Shanghai Comp indices deteriorated 2.4 percent and 1.1 percent week on week, respectively.
Elsewhere on the local scene, a 3.89 percent week on week price appreciation in the oil & gas index, resulting from Seplat Energies acquisition announcement on Friday that it entered a sale and purchase agreement with Mobile Nigeria Production Unlimited, drove a positive rally on the NGX last week as the local market ended on a warm note, recording a marginal 0.40 percent week on week increase to give market investors N101.3 billion in weekly gains.
Though the oil and gas space remained a beneficiary of higher crude prices, equity analysts foresee a tepid session to start off the week as investors take a position in names that have seen price declines in the recent sessions. Also, modestly positive performance is expected to be sustained in the market.
Last week, domestic equities halted a 2-week bearish streak with a 0.4 percent rebound which pushed the market allshare index higher to 47,328.42 index points while the market capitalization rose further to N25.51 trillion from N25.41 trillion the previous week or at the opening of the week. As a result, the market year to date return improved to 10.8 percent from 10.4 percent the pre vious week and meanwhile, the average volume traded rose 2.1 percent week on week to 333.6 million, while the average value of securities traded fell 32 percent week on week to N3.9 billion.
Diving into the sectors, price appreciation recorded in Seplat Energies by 7.5 percent and Eterna Plc by 7.4 percent, respectively, drove 3.9 percent weekly gains in the oil and gas sector as a result of the positive rally in the price of crude oil to above $100 per barrel. Thus, the sector led the gainers’ table alongside the insurance index, which recorded a 0.7 percent increase from the previous week as a result of price appreciations in Niger Insurance (40%), and Cornerstone Insurance (16.7%) respectively.
Other than that, interest across the market was cowed, with the banking sector rising 0.21 percent week on week, driven by an interest in UBA (1.75%), Wema Bank (9.3%), and Guaranty Trust Holding Company (2.7%), while the Technology or ICT index reported weekly gains of 0.4 percent week on week due to price upticks in MTN Nigeria (1.0%).
On the other hand, investors took profit across the consumer and industrial goods indices as they lost 1.1 percent and 0.01 percent week on week respectively, on the back of price moderations in Flour Mill of Nigeria (-8.8%), Dangote Sugar (-7.1%), and Lafarge Africa (- 0.4%) resulting from marginal sell-side actions. Meanwhile, investor sentiment, as measured by market breadth, strengthened to 0.3x from 0.1x in the previous week as 44 stocks gained, 20 lost while 88 were unchanged.
At the close of the final trading week in February, the NGX 30 Index increased by 0.6 percent week on week to close at 1,817.12 points as against 1,806.29 points reported on the previous week’s close. Market turnover closed with a traded volume of 150.35 million units. International Breweries and Access Bank were the key gainers, while Guinness and Sterling were the key losers.