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Market Views

Investors are dumping Google, Amazon and Facebook for Caterpillar, Airline Stocks

Stock traders momentarily increased their selling pressures on technology shares that have rallied through COVID-19 and rotated into cyclical stocks.

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Stocks, U.S. approves New York Stock Exchange listing plan to cut off investment banks

Major investors reduced their holding on stocks popularly referred to stay-at-home stocks amid falling COVID-19 caseloads globally.

The stay-at-home stocks which include Facebook, Alphabet’s Google, Microsoft, and Netflix fell in a trend seen for most of the week. Amazon.com, the world’s most valuable online retail company also dropped in value, as investors sold these growth stocks that have done incredibly well since last March.

The global number of new COVID-19 cases has plunged by 16%  over the past week, the World Health Organization recently revealed.

READ: Red Monday: Investors lose $2 billion trading crypto

Stock traders momentarily increased their selling pressures on technology shares that have rallied through COVID-19 and rotated into cyclical stocks set to benefit from record demand once the COVID-19 pandemic is curbed to the barest minimum.

  • Industrials led rising sectors in the S&P 500 at the most recent trading session spurred by a 9.9% surge in Deere & Co and Caterpillar 5.0% surge to an all-time peak of $211.40 a share. Financials, materials, and energy, along with industrials, rose more than 1%.
  • The S&P 1500 airlines index jumped 3.5%, with post-pandemic travel in focus.
  • When the world’s largest economy is roaring, usually industrial-based stocks like Caterpillar Deere & Co. do well, but when America’s economy weakens investors get less attracted to them.

READ: Crypto traders suffer heavy losses of $639 million within a day

Stephen Innes, Chief Global Market Strategist at Axi in a note to Nairametrics spoke on macros investors are keying into amid rising inflation.

“US stocks struggled and rebounded into the close, but the reflation rotation has given way to the heated debates around US rates for most of the day.

“Stocks are at the brink of moving from the sweet zone into the danger zone as the US Fed rate hikes start nudging towards 2022 and the taper tantrum drum keeps beating in the distance.

“With large-scale stimulus amid recovery from the Covid-19 shock, investor attention has focused on potential impacts from rising rates and inflation.

READ: Bitcoin produces 94,000 millionaires

Bottom line: Stock traders are reducing their positions in these growth stocks, on COVID-19 caseloads receding, as global investors are fully aware the best offense is a good defense by taking your foot off the gas pedal at these tech stocks as the most straightforward function of damage control.

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina. He is a Member of the Chartered Financial Analyst Society.

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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.

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Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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Market Views

Zenith Bank’s stellar earnings pause bearish trend at Nigerian bourse

Zenith Bank had earlier released its audited financial year 2020 results showing impressive growth on the back of a stellar Q4 outing.

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Zenith Bank GMD Ebenezer Onyeagwu, Central Bank of Nigeria, CBN's loan-to-deposit ratio policy, Nigerian Stock Exchange NSE stocks, Banks in Nigeria, Deposit Money Banks in Nigeria, Zenith Bank collaborates with fintechs, but insists it is not scared to compete with them, Zenith Bank sets withdrawal limit for customers, as dollar sells for N400, NIGERIA| ZENITH BANK: Revaluation gains support marginal profit growth

The Nigerian bourse ended the second trading session slightly positive amid impressive gains from Zenith Bank. The All Share Index improved by 0.03% to 40,164.86 index points. Year-to-date return and market capitalization settled at -0.26% and N21.01 trillion respectively.

A total volume of 337.9 million units of shares, valued at N3.84billion exchanged hands in 4,164 deals.

The most traded stocks by volume were FBNH (64.58 million units), ZENITHBANK (52.67 million units), TRANSCORP (41.98 million units) and while ZENITHBANK (N1.34 billion), FBNH (N471.80 million) and UBA (N128.22 million) topped the value chart.

AIICO (+7.14%) led the gainer’s chart today, while SUNUASSUR (-9.88%) was the top loser. However, the market breadth index was negative with 16 gainers against 24 losers.

Top gainers

  1. AIICO up 7.14% to close at N1.2
  2. LIVESTOCK up 7.14% to close at N2.25
  3. FLOURMILL up 6.16% to close at N31
  4. ZENITHBANK up 4.84% to close at N26
  5. CUTIX up 4.65% to close at N2.25

Top losers

  1. SUNUASSUR down 9.88% to close at N0.73
  2. LASACO down 9.87% to close at N1.37
  3. AFRIPRUD down 9.85% to close at N5.95
  4. ABCTRANS down 8.57% to close at N0.32
  5. UPL down 8.53% to close at N1.18

Outlook

Nigerian stocks ended Tuesday’s trading session on a slightly positive note amid stellar performance for Nigeria’s top tier-1 bank.

  • Zenith bank, some hours ago had earlier released its audited financial year 2020 results showing impressive growth on the back of a stellar Q4 outing.
  • In FY’20, the tier1 bank recorded a 10.4% YoY jump in profit after tax to N230.6 billion (vs N211.6 billion expected).

That being said, the Nigerian Stock Exchange consumer goods and insurance indices fell by 1.61% and 0.92% respectively. On the flip side, the NSE banking index closed as the lone gainer, up by 1.68%, while the industrial and energy indexes remained unchanged.

Nairametrics recommends you seek the advice of a stockbroker amid price volatility presently prevailing at medium and low capitalized stocks.

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