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The bears dominated the floor of the Nigerian Stock Exchange for the seventh consecutive week, as market data for the week ended 19th March 2021 revealed that the All-Share Index and the market capitalization depreciated by -0.69%, to close the week at 38,382.39 points and N20.082 respectively.

This sustained bearish sentiment in the equity space has been linked by analysts to the sustained spike in bond yields, and the uptick in the benchmark yields for Treasury Bills and CBN’s special bills.


Analysts views on the bond yield – equity performance inverse relationship

The ED, Treasury & Operations, Abbey Mortgage Bank, Dipo Adeoye suggested that there is a natural inverse relationship between the bond yield and the performance of the stock market.

This is the market reality in the current dispensation, as investors adjust their portfolio with risk and reward in view, in line with the functional relationship.

A fixed income trader in UBA, Udegbunam Dumebi, explained that the recent move is not out of par when compared to the international markets. He stressed that investors look at local currency yields, and then compare these yields with local inflation, with a simple inflation adjustment being an adequate guide. This helps in portfolio construction and gives investors a clue about where to invest over time.


Despite the prevailing bearish sentiment, some stocks delivered gains in excess of 6%

Despite the prevailing market move which impacted the performance of key consumer goods and industrial stocks on the NSE, some shares saw their market value surge by about 6% during the week, not minding the bearish performance of the industrial index and the consumer goods index.

This move was driven by the decision of astute investors, who took positions in the shares of some solid industrial and consumer goods companies during the week, thus driving the shares to print gains in excess of 6% for existing shareholders of the company.



Some of these shares are:


Northern Nigerian Flour Mills (NNFM), W-0-W GAINS: 9.73%

Shares of Northern Nigerian Flour Mills – an active miller in the country with a core presence in the Northern part of Nigeria – surged by almost 10% in value, after losing more than 45% of its market value from January 29 high of N9.68 per share.

NNFM shares surged by 9.73% at the end of the week ended 19th March 2021, as investors pick up shares of the flour miller at N5.15 per share. This move pushed the shares of the company to N6.20 at the end of trading activities for the week.


Guinness Nigeria Plc (GUINNESS), W-o-W GAINS: 7.66%

The leading beverage and alcohol company continues to be the toast of investors in 2021, with the shares of the brewer increasing by more than 33% so far this year.

Shares in Guinness Nigeria Plc surged by 7.66% at the end of the week ended 19th March 2021, at the back of sustained buying pressure, which has seen the shares of the brewer increase from this year’s low of N17.65 on 7th January 2021, to N25.30 at the close of market for the week on Friday, 19th Match 2021.

Since Diageo’s Chief Executive Officer, Ivan Menezes on September 28 2020, revealed that “the pace of sales recovery in markets in Africa (with Nigeria inclusive) would be more gradual, as travel retail continues to be severely impacted while the on-trade channels re-open in Africa.” Shares of Guinness Nigeria Plc has increased by more than 80%.


Berger Paints Plc (BERGER), W-o-W GAINS: 7.44%

Berger Paints Shares during the week surged by 7.44% after the shares of the company slid down to N6.05 on the 10th of March, from N7.34 at the open of the market for the year.

Investors who bought shares of the company at the open price for the year have seen the value of the company’s shares decline by 11.59%.


NASCON Allied Industries Plc (NASCON), W-o-W GAINS: 6.43%

The shares of NASCON – the leading player in salt refining in Nigeria, with additional business lines which include Vegetable Oil, Tomato Paste and Seasoning – surged by 6.43% to close the week on a positive note at N14.90.

NASCON shares after hitting a 52-week high of N17.55 per share declined by about 30% to N13 on March 8, 2021. Since then, the shares of the company has increased by more than 15% to maintain its current price of N14.90.

At the current price, the YTD gains of NASCON Allied Industries Plc shares currently stands at 2.76%.



What to expect

The current reality in the market supports a sustained bearish move in the week ahead. The FGN N150 bond issuance programme for the month of March 2021, is expected to take a toll on the Nigerian Equity space.

The auction date for the FGN N150 billion bond has been pegged for this week, the 24th of March, while the settlement date for the bond offers has been set for March 26, 2021.

The impressive yields of 16.2884% on the 10-year bond and 12.5% on the 15-year bond is expected to sway some investors to liquidate their positions in some stocks on NSE.

This is expected to drive a sell-down in the stock market, as well as a sustained bearish performance for the 8th consecutive week.

Note that the announcement of the FGN bond issuance programme on Thursday evening, after the close of trade activities, triggered a 1.37% decline in the NSE All-share index and market capitalization the following day, Friday 19th March 2021.



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