As the stock market moves into the second half of the year, investors are closely watching earnings reports and interim dividends from banks and other companies amid ongoing recapitalization efforts in the banking and other sectors.
Price corrections and profit-taking on the Nigerian Exchange Limited (NGX) are creating buying opportunities for savvy investors during ongoing portfolio rebalancing ahead of the second half of 2024. Financial analysts predict that market activity will be dominated by banks and other companies raising funds for recapitalization.
Last week, cautious investor behavior led to slow market activities as companies entered their close periods ahead of H1’24 earnings releases. Consequently, the NGX All-Share Index (ASI) dropped by 4 basis points week-on-week (W/W) to close at 100,022.03 points, down from 100,057.49 points the previous week.
The year-to-date (YtD) return ended at 33.8%, with market capitalization closing on Friday at N56.580 trillion, down from N56.691 trillion the previous week. Trading activity showed that the total traded volume and value decreased by 14.6% W/W and 37.6% W/W, respectively.
Sectoral performance was generally positive, with the Banking sector gaining 3.9%, Oil and Gas 3.0%, Insurance 2.3%, and Industrial Goods 0.2%, while the Consumer Goods Index declined by 0.7%.
Analysts at Cordros Research commented on the market development, saying: “As the half-year earnings season approaches, we believe investors will look for signs of improvement following the broadly lackluster Q1-24 corporate earnings. Consequently, we expect mixed market performance in the coming week, with bargain hunting balanced by intermittent profit-taking activities.”
Analysts at InvestData Consulting added: “We expect mixed sentiments and profit-taking that will create new entry opportunities for discerning market players ahead of the earnings reporting season kicking off any moment next week. Portfolio repositioning will continue, with investors taking advantage of pullbacks to buy into value. This is amid the volatility and pullbacks that add more strength to upside potential. As such, investors should take advantage of price corrections, considering trends and events both globally and domestically.”
