Prospect for banking shares as NGX remains positive

Amid bullish activity last week, the Nigerian Exchange Limited All Share Index rises by 0.01 per cent.

The marginally week-on-week rise saw the ASI settle at 39,485.65 points, leading the the Year-to-Date loss of the domestic bourse to moderate to 1.95 per cent.

According to analysts, the market reacted slowly to the spike in second quarter Gross Domestic Product growth rate of 5.01 per cent Year-on-Year and the positive half year 2021 financial result of quoted companies.

The 30 kobo interim dividend declared by Zenith Bank Plc also got positive reaction from investors.

Analysts at Cowry Asset Management noted that the sharp rise Y-o-Y in Q2 2021 was amid low base effect, as the negative effect of the Coronavirus Disease was more intense in Q2 2020; hence, reducing economic activities.

“We expect moderate growth in Q3 2021 amid constraints to agricultural output, partly due to insecurity,” the researchers said.

According to the NGX, the value of Securities Lending market increased to N513m as at August 20, 2021 amid rising stakeholders’ participation, as 2.3 million units of MTN Nigeria Communications Plc valued at N395.6m was borrowed.

Sectoral performance was upbeat as three of the five indices tracked closed in the green zone; the banking, insurance and oil and gas indices increased by 0.30 per cent, 1.06 per cent and 0.08 per cent to 378.99 points, 190.07 points and 1,976.72 points respectively.

But the consumer goods and industrial indices moderated by 0.43 per cent and 0.19 per cent to 556.59 points and 1,976.72 points respectively.

Meanwhile, trading activity was mixed, as total deals and volume of stocks traded increased by 7.84 per cent and 18.36 per cent to 18,647 deals and 1.02 billion units, while the value of stocks traded fell by 33.24 per cent to N8.18bn.

“In the new week, we expect the equities market index to trade positively, as investors are likely to buy banking shares, especially the tier-1 banks, amid anticipated interim dividend payment,” the experts at Cowry said.

Meanwhile, sentiment remained bullish at the Fixed Income space, as investors continue to offer the bonds at lower yields amid demand pressure, even as the naira depreciated against the Greenback in most market segments amid stronger demand relative to supply.

As a result, the local currency depreciated by 0.08 per cent to N412/USD at the Investors and Exporters forex window, despite the rise in external reserves by 0.22 per cent Week-on-Week to $33.57bn as at Thursday, August 26, 2021.

Ehime Alex
Ehime Alex
Ehime Alex reports the Capital Market, Energy, and ICT. He is a skilled webmaster and digital media enthusiast.

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