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Market Views

GTBank, Dangote Cement keep Bulls roaring high

Market breadth closed positive as NASCON led 20 Gainers as against 6 Losers topped by NNFM at the end of today’s session.

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Nigerian stock market ended its last trading session on an impressive note. The All Share Index gained 0.47% to close at 28,697.06 points as against +0.40% appreciation recorded on Thursday.

Nigerian Stock Exchange market capitalization now stands at N14.99 Trillion. Its Year-to-Date (YTD) returns currently stands at +6.91%.

  • However, the Nigerian bourse trading turnover fell short of expectation as volume moved dipped by 9.11% as against -4.67% downtick recorded on Thursday. ACCESS, GUARANTY, and UBA were the most active to boost market turnover.
  • AFRINSURE leads the list of active stocks that recorded an impressive volume spike at the end of today’s session.
  • Market breadth closed positive as NASCON led 20 Gainers as against 6 Losers topped by NNFM at the end of today’s session – an improved performance when compared with the previous outlook.

Top gainers

  1. NASCON up 10.00% to close at N14.3
  2. PZ up 7.32% to close at N4.4
  3. ZENITHBANK up 1.69% to close at N21
  4. GUARANTY up 1.50% to close at N30.45
  5. DANGCEM up 0.67% to close at N151

Top losers

  1. NNFM down 9.89% to close at N4.19
  2. NPFMCRFBK down 4.29% to close at N1.34
  3. HONYFLOUR down 4.21% to close at N0.91
  4. UNIONDAC down 3.70% to close at N0.26
  5. VITAFOAM down 3.23% to close at N6

Outlook

GTBank 728 x 90

Nigerian bourse continued its bullish run amid a shutdown of economic activities at Nigeria’s economic nerve center Lagos and Rivers amid ongoing curfew put in place in order to calm hostilities prevalent in some areas.

  • Bulls seem to be rallying high amid soaring crude oil prices, and high buying pressure noticed in some Nigerian blue-chip stocks like Dangote Cement and GTBank.
  • However, Nairametrics expects you to seek the advice of a certified stockbroker when choosing stocks to buy, as some of these stocks exhibit cyclic returns in principle.

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Featured Financial Market Analysis for a Fortune Global 500 Company. Member of the Chartered Financial Analyst Society. Follow Olumide on Twitter @tokunboadesina or email [email protected]

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Market Views

Bank stocks remain a buy amid uncertainty prevailing Nigeria’s economy

The All-Share Index and Market Capitalization depreciated by 2.57% to close the week at 34,136.82 and N17.838 trillion respectively.

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Investors flee Nigerian Stocks as FDI and FPI dips

Nigerian Stocks ended the previous week cumulatively on a bearish note.

What we know: The All-Share Index and Market Capitalization depreciated by 2.57% to close the week at 34,136.82 and N17.838 trillion respectively.

In the previous week, Nigerian Stocks had its bullish run halted arbitrarily on the bias that stock traders and investors intensified their profit, taking into account the significant amount of weak earnings recorded by Nigerian Banks.

It was unsurprising to see four Nigerian banks in the top 10 losers chart for the week, as investors fretted on such performance on the basis that Nigeria’s banking industry remains the most vibrant after Agriculture, Energy in Africa’s largest economy.

GTBank 728 x 90

That said, In the coming week stock traders are expected to be very cautious amid recent macros showing Africa’s largest economy has dipped into a recession in Q3 as oil production dropped to a four-year low.

Abdul-Rasheed Oshoma Momoh, Head of Capital Market in TRW Stockbrokers Ltd, in a phone chat interview with Nairametrics, said Nigerian markets are presently playing out like a ping pong ball the momentum has slowed down for now.

More of consolidation now as investors buy into good stocks that have a light at the end of the tunnel. (Zenith Bank, UBA, GTBank, First Bank, Access Bank) taking into consideration he doesn’t see any new highs now till 2021.

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Bottom- line: Profit taking is expected to remain at least in the near term, taking into consideration Nigeria is officially in a recession, meaning a lot needs to be done to get Africa’s biggest economy on its foot, as such development could trigger more profit-taking in spite of the positive trend playing relatively at Africa’s best-performing equity market.

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Currencies

U.S dollar drops, Currency traders fear increasing COVID-19 caseloads

The U.S. Dollar Index, which monitors the greenback’s strength against a basket of major currencies dropped 0.14% to trade at 92.263 points.

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parallel market, greenback, U.S dollar rises against major currencies, U.S and China’s economic data support the dollar, U.S dollar gains ground, U.S. President Trump boosts investors’ Optimism, Exchange rate stabilizes across forex markets as CBN moves against abuse by dealers

The U.S dollar suffered significant losses at the first trading session of the week. Currency traders are having their hopes dashed as a result of the increasing COVID-19 caseloads going out of control specifically in emerged markets amid promising potential COVID-19 vaccines already in the pipeline.

  • At the time of writing this report, the U.S. Dollar Index, which monitors the greenback’s strength against a basket of major currencies dropped 0.14% to trade at 92.263 points.

READ: U.S dollar drops lower, as U.S Federal Reserve plans on boosting inflation

What this means

Currency traders seem to be highly concerned about reports that millions of Americans are anticipated to flout warnings to stay indoors amid the upcoming Thanksgiving holiday, raising fears such significant movement of humans could trigger the number of COVID-19 cases that are already going out of control.

In addition, Western Europe does not look immune too, taking into consideration that Europe’s largest economy Germany, could see its current restrictions on human mobility extended until mid-December.

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READ: Afreximbank posts $217m net income in 9M 2020

What you should know

The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound Sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries in Europe or Japan, would need to pay more dollars in fulfilling such payment obligations.

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READ: Billionaires that can triple the value of Bitcoin

What they are saying

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave key insights into the macro that is playing out at the currency market.

“With just over a month to go until Christmas now, attention will remain on the Covid-19 pandemic as governments worldwide continue to impose tough restrictions on their citizens to contain the spread of the virus.

READ: Trump International Hotel sale stalled

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“Economic data will likely get worse before it gets better. The impact of continued lockdowns will be felt for some time before vaccines become widely available.”

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Bottom Line

The currency market is having a tug of war right now establishing whether it can look through nearer-term negative data and news.

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Market Views

Why you should consider investing in Amazon

Amazon stock is up 77% YTD, and the company recently announced the launch of an online pharmacy.

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Amazon- More than 19,000 workers got the Covid-19 virus

The world’s most valuable online retail company, Amazon, is worth a whopping $1.5 trillion – this valuation is bigger than Africa’s top ten banks capitalization value combined.

Still, the Nasdaq traded stock is red hot relatively, taking into account the stock is up 77% YTD, and the company recently announced the launch of an online pharmacy, meaning it has ventured into a juicy ecosystem that considerably offers better margins when compared to generic goods like wears, toys.

READ: Why PayPal dropped 6% after posting its strongest earnings growth

READ: Nigeria’s non-oil exports increase by 100%

Such a move signals an overnight paradigm shift for the online retail ecosystem, amid fears from its rivals that the online retail juggernaut has a massive amount of cash to push forward such a project.

GTBank 728 x 90

A recent report from Deloitte research anticipates e-commerce sales will climb between 25% and 35% year over year during the holiday shopping season.

READ: Bank chiefs make a serious demand following CBN deduction of N499 billion 

Global investors have relatively increased their buying pressure on the Stock, on the bias that the outlook for global e-commerce is much brighter amid the COVID-19 pandemic, forcing more individuals globally to shop online.

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Its latest earning results show its fundamentals remain upbeat;

  • Operating cash flow increased 56% to $55.3 billion for the trailing twelve months, compared with $35.3 billion for the trailing twelve months ended September 30, 2019.
  • Free cash flow increased to $29.5 billion for the trailing twelve months, compared with $23.5 billion for the trailing twelve months ended September 30, 2019.
  • Net sales increased by 37% to $96.1 billion in the third quarter, compared with $70.0 billion in third-quarter 2019.

READ: Royal Exchange, two others announce their closed period ahead of Q3 financial results 

  • Excluding the $691 million favorable impacts from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 36% compared with third-quarter 2019.
  • Operating income increased to $6.2 billion in the third quarter, compared with operating income of $3.2 billion in third-quarter 2019.
  • Net income increased to $6.3 billion in the third quarter, or $12.37 per diluted share, compared with net income of $2.1 billion, or $4.23 per diluted share, in the third quarter of 2019.

READ: Meyer Plc: Decrease in paint sales depletes revenues

It’s not surprising its founder Jeff Bezos is reportedly worth $183 billion, according to the Bloomberg Billionaires Index.

Although, since the amazing online retail stock hit $3,550 per share in early September, it dropped about 12.7% from the peak, as it presently trades around $3,099.

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READ: MTN Nigeria records 16.6% increase in revenue in Q3 2020

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Bottom Line

Nairametrics anticipates its cloud investments will pay off in the mid-term, taking into consideration it’s the world-leading market shareholder in cloud computing, coupled with the fact it offers the company incredibly high-profit margins and not forgetting the pending holiday season coming to play.

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