Amid mixed corporate earnings, equities market down by N628bn in Q1

BY Kayode Tokede

Amid mixed corporate earnings declared by listed companies in 2020 and money market auction, the equities market of the Nigerian Stock Exchange (NSE) dropped by N628billion in first quarter of 2021.

The market capitalization opened for trading in the year at N21.06trillion and closed on Wednesday at N20.43trilllion.

The equities market indicator, the NSE All-Share Index also dropped by 3.04per cent to 39,045.13 basis points from 40,270.72 basis points the market opened for trading this year.

The first three months has been turbulent for investment as the exchange confronted headwinds from internal vulnerabilities like profit-taking, market correction as well as pressure from less-than-impressive earnings reports.

The head of research, PanAfrican Capital Holdings Limited, Moses Ojo said the modest yield environment in the money market instrument drive equities market performance in Q1.

The managing director/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi, also said, “As long as low yield in the money market persist, we will continue to have liquidity in the capital market.

The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion had predicted that  “the equities market is to witness volatility, even as the outlook remains mixed due to likely price corrections, or pullbacks for a few days due to profit taking and portfolio reshuffling ahead of year-end and 2021 corporate actions.

“The anticipated correction will strengthen recovery.  Despite the rising inflation, insecurity and the second wave of coronavirus, as this wave will further boost the healthcare sector due to government and CBN commitment to enhance public health.”

He added that the current breakouts of resistance levels offer traders opportunities to position for the short term, while investors should target fundamentally sound, and dividend-paying stocks for possible dividend income and capital growth.

According to capital market analysts, the wing in money market instrument yields is paving ways for investors to dump the equities market.

They explained that “In the first three months of 2021, investors’ attention was focused on the bond auction results as they keep an eye on the movement of yields in the financial market.”

They added that, “As the 2020 earnings season gradually fades away, we expect investors’ sentiment to be influenced by developments in the macroeconomic landscape and corporate actions.”