Stock Market Review: November 28, 2022

The stock market last week closed on a positive note with 6.88% growth, week on week.

In a stock market review with the MD/CEO of Global View Capital Limited, Aruna Kebira, the capital market guru explained the factors behind the current positive vibration in the market.

Excerpts:

The stock market last week closed on a bullish note with 6.88% growth, week on week. How sustainable is the current bullish run?

The market after the news of the rift between Ukraine and Russia suffered serious set back and decline leading to serious diminution in prices of stocks across board.
No sector or stock was spared. And to make matter worse, the CBN has continued to raise interest rate since the beginning of this year and inflation has also been on the rise while GDP growth tanks.
To further improve liquidity in the system, the CBN announced the redesign of the current currency in circulation and that exercise led to whooping sums of money finding their way back into the financial system. And because the CBN can aggregate all your account balances through the BVN, the only safe haven for such recovered monies is investment.
The entrant of such money into the capital market space created the needed liquidity in the last two weeks and market responded accordingly.
As per sustainability, the market will be up in this way as much as the liquidity subsists and do not forget the Santa Claus rally.
I believe the current market tempo would be sustained until 2023

•What are the possibilities for the week?

Investors should still bear at the back of their minds that at the end of any bull run comes the bear and the stocks that would be able to whether the storm are fundamentally sound stocks.
Please keep an eye on the Q3 numbers while you rejig and align your portfolio to reflect the current realities.

• What is driving the prices of Nigerian Breweries, Airtel, BUA Foods, Dangote Cement, BUA Cement and MTN?

Nigerian Brewery in response to the directives of the CAC elected to give its shareholders a bonus of 1 for 4 which translates to 25% of whatever price the marked down is done. While that was in the offing, the stock was also trading cum-div with an interim dividend of N0.40. The market has no choice than to compensate the stock for those corporate actions.
The news of buy back had been the force moving the price of Dangote at the end of the year for the past two years now, I also think that that is what is responsible for current upward movement of the price
MTN during its public offer traded N167.00 and recently declined to N188.00. The stock is rising back to where it was dropped from.

•Why is Nestle trending down? What should investors in Nestle do?

Nestle in its Q3 2022 earnings release reported N333n turnover, with a N50.60k earning per share and interim dividend of N25.00 is supposed to be compensated by the market but the market decided to punish the price as soon as the marked down was effected.
The decline in the price of Nestle is not out of management incompetence but out of the run of play of the market.
There is a big and desperate seller that depressed the price on Friday. Any price below N900 for Nestle is cherry picking

•Is Presco a good BUY at N110?

Presco happened to win the Pearl Award for excellence in the Agricultural category on Sunday November 27, 2022. This is testimony of the numbers and corporate Governance emanating from the company.
Presco is good for consideration at N110.00

•What are the possibilities in UBA, Access, Zenith, FBNH and GTCO?

These are the arrow heads of the banking stocks in the country and are also at the front burner in whatever yardstick your deploy to analyse performance in that sector.
Though the prices have appreciated since the last two weeks, I believe they are still cheap at their current prices

•Nigeria’s GDP growth rate dropped to 2.25% in Q3 2022. How would this impact the capital market?

The market is a discounter, the negative information that have been available at the market arena have been fully discounted by the market.
Since this is not the first quarter that the Nigeria GDP will be declining, the market will take the information with a pinch of salt.

•What are the stocks to watch?
For the week investor should keep an eye on Nestle as there could be a reversal, Fidson, Floumill and NGX

Source: Stock Market Review: November 28, 2022 – StocksWatch (stocksng.com)

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