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Equities pricing: Weak sentiments may prevail despite Q3 earnings expectation

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INVESTMENT analysts in the capital market have said that the negative sentiment that has pervaded the equities market for greater part of this year may continue despite expectation of release of quarter three, Q3, corporate earnings by quoted companies.

Already some early filers have declared their closed period to allow them review and complete their reports ahead of the release.

Expectedly, the stock market rebounded week-on-week,w/w, at the close of transaction on Friday, by 0.23 percent as investors swooped on undervalued stocks with the All Share Index, ASI, closing higher at 32,456.98 points, while market capitalisation rose by N26.95 billion to close at N11.85 trillion.

However, analysts insisted that despite positive close, the market would continue in the negative direction.

According to analysts at Afrinvest Securities, market performance could potentially be swayed by investors’ reaction to the corporate releases, albeit marginally. “Nevertheless, we expect the generally bearish sentiment in the broad market to persist,” they said.

They asserted that lingering political uncertainties as well as the weakened appetite for emerging market assets is expected to keep market performance downbeat.

Also, analysts at Vetiva Capital Management stated that though closing positions for last week indicated a positive tilt to trading, thin volumes and weak investor appetite signal still damp sentiment, which might result in mixed closes this week.

Analysts at Cordros Capital also reiterated a negative outlook for the market in the short to medium term, pointing political concerns in the build-up to 2019 elections, and absence of a positive market trigger as causes.

Meanwhile, analysis of activities last week showed that performance across sectors was mixed as two out the three sectors advanced, while three declined. The banking sector improved the most, up 0.8 percent as investors took position in Zenith Bank Plc and Guaranty Trust Bank, which rose by three percent and 0.3 percent respectively, while the industrial goods sector rose by 0.3 percent.

On the flipside, the insurance sector depreciated the most, falling 1.7 percent on account of 7.7 percent decline in the shares of Axamansard Insurance.

Similarly, the oil and gas and the consumer goods sector dropped by 0.9 percent and 0.7 percent following losses in Oando Plc (-2.9%) and Nigerian Breweries Plc (-1.9%) respectively.

Activity level strengthened as average volume and value traded rose 14.5 percent and 0.3 percent to settle at 182.9 million units and N2.0 billion respectively.

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