Stock market weakens despite strong H1’23 results in banking sector

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Stock market weakens despite strong H1'23 results in banking sector
Stock market weakens despite strong H1'23 results in banking sector

Stock market – The Nigerian banking sector on the Nigerian Exchange Limited (NGX) has showcased its resilience as several top-tier banks report robust half-year earnings, while the local bourse experienced a 1.1% week-on-week decline, with the All-Share Index (ASI) closing at 67,395.74 points.

The outstanding performances of United Bank for Africa (UBA) and Zenith Bank have led to substantial increases of 150% and 66.67%, respectively, in their interim dividend payouts.

This has provided valuable insights for market participants, offering a glimpse of what to anticipate by year-end.

As the third-quarter earnings reporting season approaches its conclusion, investors are closely monitoring the half-year financial results of Access Corporation (Accesscorp), AXA Mansard, and Consolidated Hallmark Insurance, along with interim dividend announcements.

Market direction will be influenced by the upcoming Monetary Policy Committee (MPC) meeting and fiscal developments.

During last week’s trading sessions, profit-taking activities primarily in Zenith Bank (-10.0%), Guaranty Trust (GTCO) (-8.1%), Dangote Sugar (-10.8%), and MTN Nigeria (-1.5%) contributed to the market’s weak performance.

Banking, oil & gas, and consumer goods sectors decline

Consequently, the Month-to-Date (MtD) and Year-to-Date (YtD) gains settled at +1.3% and +31.5%, respectively.

Total trading volume and value increased by 10.9% and 4.4%, respectively, reflecting higher activity levels.

Sectoral performance was mixed, with the Banking Index declining by 3.2%, Oil & Gas Index down by 2.0%, Consumer Goods by 1.8%, and Industrial Goods by 0.3%. The Insurance Index was the sole gainer, up by 0.5%.

Cordros Research analysts anticipate cautious trading in the upcoming week due to the absence of strong positive triggers.

They advise investors to seek opportunities in fundamentally sound stocks, given the challenging macroeconomic environment.

Investdata consulting Limited analysts expect mixed sentiments and a slowdown in selloffs, driven by bargain hunting and upcoming half-year earnings reports from Accesscorp, as well as interim dividends from Chi Plc and Mansard. Portfolio reshuffling and continued sector rotation are also anticipated.

Despite pullbacks, buying opportunities are emerging in light of government economic reforms, policy announcements, and active economic management, which are expected to provide clearer investment direction in the future.”