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A Weekly Newsletter
Last Updated 27 August 2010 Download PDF
Stanbic IBTC Market Watch 27 August 2010
Investors jittery about new banking policies
Nigerian equities closed lower this week triggered by market concerns regarding banks’ implementation of new CBN policies on margin lending. Also of concern to investors were: (1) the delayed implementation of the AMCON; and (2) political risk. On a positive note, the market staged a rally in yesterday’s trading as investors found value in equities at current levels. This rally partly offset earlier losses and the index closed on 24,175, a 4.1% decline for the week. In the same vein, volumes and values lost c.18% w/w.
Power sector road map unveiled
Among important developments this week, the federal government unveiled its road map on the power sector, which, in addition to electoral reforms, is expected to be the hallmark of President Jonathan’s administration before the general elections in 2011. The president’s power road map boasts of a stable and sufficient power supply by 2012, which would result in energy cost savings and support earnings growth of local manufacturers. However, we are cautious on the impact of this programme and would like to see some execution before passing judgement, given that previous administrations failed to deliver on similar promises.
A dearth of catalyst in the week ahead
We expect the market to trade within a thin range in the coming week as investors remain cautious on equities and as the H1:10
corporate earnings reporting season winds down. Guinness Nigeria Plc is expected to publish its FY10 earnings results next week but we do not expect this to excite the market. We expect to be down relative to FY09, owing to higher raw material and marketing costs. In addition, we fear investors could read this week’s dismissal of a third of the NSE’s work force as a sign of distress. We stress that this development at the NSE is not a sign of distress but rather a sign of strength as the SEC seeks to improve the operation of the exchange and restore investor confidence in Nigerian capital markets.
Nigerian equities closed lower this week triggered by market
concerns regarding banks’ implementation of new CBN policies on margin lending. Also of concern to investors were: (1) the delayed implementation of the AMCON; and (2) political risk. On a positive
note, the market staged a rally in yesterday’s trading as investors
found value in equities at current levels. This rally partly offset
earlier losses and the index closed on 24,175, a 4.1% decline for the
week. In the same vein, volumes and values lost c.18%...
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