Investors reposition portfolios for 2021 full year earnings

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•As speculators hit BUA Foods

By Peter Egwuatu

Investors’ moves to reposition their portfolios in the stock market gained momentum in the new year, pushing market indices to new heights. They are positioning for 2021 full year corporate earnings.

The first trading week of 2022 started on a strong footing, with the benchmark index recording gains in all trading sessions last week.

Capital gains surpassed NI.3 trillion in the four trading days last week, with the All-Share Index advancing by 2.7 per cent Week-on-Week, W-o-W, to close at 43,854.42 points.   

Market capitalization, which reflects investors’ worth on the Exchange, closed at N23.627 trillion, up from N22.296 trillion it opened the year.

READ ALSO: BUA Foods receives approval to list on the NGX

Meanwhile, speculators have started buying into BUA Foods that was listed last week on the Nigerian Exchange Limited, NGX, as its shares rose by 9.9 per cent last week to close at N53.20 per share from N40.00 per share it was listed.

Notably, foreign investors’ demand for Airtel Africa (10.0 per cent), and bargain hunting in BUA FOODS (9.9per cent), WAPCO (7.7 per cent), and First Bank Nigeria Holding, FBNH (4.0 per cent) spurred the weekly gain.

Accordingly, the Year-to-Date,  YtD, return rose by 2.7 per cent.

Activity levels were strong, as trading volume and value surged by 103.7 per cent W-o-W and 246.8 per cent W-o-W, respectively.

However, the performances across the sectors were mixed, as the Oil and Gas    Index gained 2.7 per cent, Banking Index 0.8 per cent and Industrial Goods Index 0.3 per cent while the Insurance Index declined by -0.9 per cent, and Consumer Goods Index 0.9 per cent.

Commenting on market development, analysts at Cordros Securities Limited said: “In the near term, we believe positioning for 2021 full year , FY dividends will continue to support buying activities in the market even as institutional investors continue to search for clues on the direction of yields in the Fixed Income ,    FI market.

“However, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”

Commenting as well, analysts at InvestData Consulting, stated: “With investors and analysts expecting unaudited Q4 results to start hitting the market any moment from next week, they are also likely to start positioning in companies with high dividend yields and prospect of growing their earnings power in the future, and are thereby able to support their price and ensure higher payouts.

“These, also will support the speculative moves in the market as more players return from their yuletide holidays, and the Q4 unaudited numbers give insight as regard the positions of various companies, and their dividend payment capacity on the strength of the expected numbers.

“We expect uptrend to continue on speculative buying into the newly listed food company and repositioning in dividend paying stocks ahead of 2021 Q4 and full year unaudited earnings reports that may start hitting the market any moment from next week.”

Vanguard News Nigeria