Bears dominate Nigerian equities

The equities market in Nigeria has been dominated by bearish trends this week, with only one day of gains recorded so far. Oluwaseun Arambada, a Research Analyst at Meristem Securities, sheds light on the market activity and provides insights into the potential outlook for investors. Arambada notes that the bearish sentiment has been largely observed in the Indoshagos sector and the market space, attributing it to short-term jitters. Despite the current market conditions, he remains optimistic about a possible reversal in the coming week as the underlying factors driving the bearish trend still exist. Investors are advised to stay cautious and monitor stock prices closely. When discussing catalysts that could impact the markets, Arambada highlights the upcoming full-year earnings reports across sectors. He emphasizes that there is no one-size-fits-all outlook, with each sector facing unique challenges and opportunities. For the industrial goods sector, the opening of the land borders is expected to boost export volumes for cement manufacturers. However, consumer goods players continue to grapple with the effects of the lockdown and economic slowdown, impacting consumer spending and demand. Overall, expectations for full-year earnings across sectors remain moderate. Analyzing the performance of key players in the market, Arambada delves into the cement space, particularly focusing on Lafarge Africa. He notes that the company is undergoing a restructuring phase, which has positively impacted its earnings in 2020. With ongoing cost optimization efforts and the divestment of non-performing assets, Lafarge Africa is positioning itself for improved performance in the future. Investors are advised to closely monitor the company's strategic moves for potential investment opportunities. Looking ahead to the next week, Arambada anticipates continued bullish sentiment in the equity space, driven by favorable policies and low returns in the fixed income markets. The Nigerian stock market has benefited from copious liquidity and investor portfolio shifts from money markets to equities. With these factors in play, the analyst projects a positive trajectory for the market in the first quarter and potentially the first half of the year. Investors are encouraged to stay informed and capitalize on emerging opportunities in the evolving market landscape.