The Nigerian stock market on Wednesday closed on a negative note, shedding 1.88%.
The All Share Index and Market Capitalisation stands at 53,018.97 points and N28.883 trillion respectively.
In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the following were discussed:
The market on Wednesday closed on a bearish note, shedding 1.88%. What could be driving this down trend?
Investors and the market envisaged that after the elections, there would be a clear winner, and the opposition would concede the feat and congratulate the winner.
The political situation we found ourselves in now is a far cry from that. The political horizon is hazy, uncertainty everywhere, and accusations and counter-accusations dampening the confidence of investors.
Despite the sterling earnings releases and mouth-watering dividends declared, investors are wary of the next dispensation and cannot put their fingers on what would likely happen next.
It is said that when two elephants fight, it is the grass that would suffer, the market is the grass that is suffering from the current political brouhaha.
We may see more weight shedding in stocks that has been marked down for dividends.
• Nigeria’s public debt profile in Q4 2022 rose to N46.25 trillion. How would this rising debt impact the economy and the capital market?
Most of the borrowings of the FGN have always had one monument as collateral. As the debt profile is rising and revenue is dwindling, it would put the government in a position to default, and in that case, the lenders would foreclose on any of the collaterals. If that happens, the revenue-generating ability of the government would be further dampened and the lenders would run the enterprise up until their debt is fully paid. And don’t forget that even as the debt is being paid, it would continue to accrue interest.
The debt would also make a mess of our sovereign bond as the ability to repay is threatened. There would be a lack of interest in the government bond which will in turn dovetail with the capital market.
Recent happenings in the country had already driven the foreign investors that stayed behind and local investors do not really have the capacity to move the market as their foreign counterparts.
• What are the possibilities in Wema Bank with the emergence of a new MD/CEO?
New MD does not mean new strategies. It depends on the vision and the strategy of the new man. If he is a conformist, then what we would experience will not be different from what we have experienced before, but if he has a new business strategy, then it would be a new day at Wema Bank.
The market will wait and watch the impact of the new man to determine whether is coming has a positive effect on the Bank.
• $300 million capital investment has been injected into Access Bank Plc, the flagship subsidiary of Access Holdings. How will this impact their earnings?
Access Bank has a history of performance. For every business organization, the adequacy of working capital is a necessary and sufficient condition.
These funds will help to lubricate the wheel of Access Bank’s business and what we will experience will be an expansion of operations that would hit their top and bottom-line performance and may lead to a more robust dividend payout.
I believe it will enable Access Bank to widen its horizon and take on new challenges, especially in the infotech area, and come out stronger.
• Why is Airtel trending down? How attractive is it at N1331.1?
This is earnings season and investors are jostling for dividends Airtel Africa just released its Q3 as of December 2022 in February.
The investor who has successfully taken positions in other stocks currently paying a dividend and has positions in Airtel Africa are moving their resources to cover their position.
Airtel Africa 52 week low is N1270.00 which is about 4.8% away from the current price. At that, it is attractive and buyable.
This trend in the stock could reverse when they release their Q4 and declare dividend.
• Is Flour Mills a good buy at N29.5?
Flourmill’s 52-week high is N41.45 and its 52-week low of N27.00. This means that the current price of N29.50 is 9.2% away from the 52-week low price
The closer the price of a stock trades to its 52-week low the more attractive it becomes.
• What are the stocks to watch?
Presco, Flourmill, Wapco, Nigerian Breweries and Guinness