Afrinvest Weekly Update |Equities Record Marginal Gains ASI Up 0.1% W-o-W (Source: InfoWARE, Date: 08-Nov-2019)

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Domestic Equities Market: Equities Record Marginal Gains… ASI Up 0.1% W-o-W
The local bourse halted its 5-week bearish run this week as the benchmark index gained 8bps W-o-W to 26,314.49 points due to price appreciation in LAWUNION (+31.0%), ACCESS (+17.9%) and FCMB (+16.3%). YTD loss eased to -16.3% while market capitalisation rose N10.3bn to N12.8tn. Activity level advanced as average volume and value traded increased 36.6% and 13.8% to 412.6m units and N3.7bn respectively. The top traded stocks by volume were ACCESS (228.8m units), ZENITH (175.4m units) and UBA (174.4m units) while ZENITH (N3.0bn), ACCESS (N1.9bn) and MTNN (N1.9bn) led by value.

The market started the week on a positive note as the ASI leaped 41bps on Monday due to price appreciation in GUARANTY (+3.6%), STANBIC (+5.7%) and UBA (+8.6%) while losses in NESTLE (-4.2%) and MTNN (-1.2%) dragged the benchmark index lower by 10bps on Tuesday. The bearish sentiment continued on Wednesday (-58bps) and Thursday (-14bps) as sell-offs in DANGCEM, MTNN, UNILEVER and ZENITH dragged the ASI lower. However, the market ended the week on a positive note as gains in GUARANTY (+5.9%) and ACCESS (+9.5%) buoyed performance on Friday (+48bps). 

Sector performance was mixed as 3 of 6 indices under our coverage gained W-o-W. Price appreciation in ACCESS (+17.9%), FCMB (+16.3%), CCNN (+10.1%) and WAPCO (+5.0%) pushed the Banking and Industrial Goods indices up 8.5% and 2.0% respectively. Similarly, the Insurance index gained 0.4% on the back of gains in LAWUNION (+31.0%). Conversely, the Consumer Goods and AFR-ICT indices declined 5.9% and 1.6% respectively due to losses in UNILEVER (-26.6%), INTBREW (-18.7%) and MTNN (-2.8%). The Oil & Gas index shed 0.2% following price weakness in MRSOIL (-9.7%).  

Investor sentiment weakened as market breadth (advance/decline ratio) declined to 1.0x from 1.4x recorded last week as 28 tickers gained against 27 that lost. LAWUNION (+31.0%), ACCESS (+17.9%) and FCMB (+16.3%) led the gainers while UNILEVER (-26.6%), INTBREW (-18.7%) and FIDSON (-12.5%) led losers.

We do not expect that the bullish performance would be sustained in subsequent weeks due to weak investor sentiment towards equities. However, the CBN recently restricted individuals, local corporates and non-banking financial institutions from participating in both the primary and secondary markets for Open Market Operations (OMOs). Following this directive, we expect investors' focus to shift towards equities due to current low prices and attractive dividend yields.