The Nation Newspaper

Tag: equities

  • Investors gain N126b as equities hit new highs

    Investors raked in about N126 billion in capital gains yesterday at the Nigerian stock market as the bullish rally pushed several stocks to new year-to-date highs.

    With four advancers to every decliner, the overtly bullish market situation at the Nigerian Stock Exchange (NSE) surged to new level as investors further increased demand for shares.

    Aggregate market capitalisation of all quoted equities rose by N126 billion to N10.705 trillion as against its opening value of N10.579 trillion. The main index at the NSE, the All Share Index (ASI), underlined the increases in market values of companies with an average increase of 1.20 per cent to close at 33,460.14 points compared with its index on board of 33,064.37 points.

    Several stocks rose to new highest price with Cadbury Nigeria and Unilever Nigeria rallying to new highs of N37.27 and N47.39 respectively. UACN Property Development Company rose to a high of N16.20, Access Bank peaked at N12.39, Stanbic IBTC Holdings rose to N15.69, FBN Holdings set new price level at N20, Lafarge Wapco Cement Nigeria rallied to N74.20, Ecobank Transnational Incorporated closed at a high of N14.04 while Guinness Nigeria set a new high of N297.11 per share.

    Investors staked N6.52 billion on 944.10 million shares through 8,492 deals. More than half of the stakes were on banking stocks, which altogether recorded a sectoral turnover of 457.42 million shares valued at N3.38 billion in 3,344 deals. Insurance subgroup recorded a turnover of 171.50 million shares worth N122.75 million in 598 deals.

    Transnational Corporation of Nigeria was the most active stock with a turnover of 131.79 million shares valued at N249.05 million in 472 deals. United Bank for Africa (UBA)Plc followed with a turnover of 100.61 million shares valued at N764.95 million in 631 deals. Unity Bank placed third with a turnover of 68.09 million shares worth N58.56 million in 143 deals.

     

  • Banking stocks may outperform other equities, say analysts

    Banking stocks may outperform other equities, say analysts

    • Shift in MPR unlikely in Q2

    Banking stocks have been tipped to outperform other equities quoted at the Nigerian Stock Exchange (NSE), analysts at Cordros Capital have forecast.

    In a 2013 forecast released at the weekend, the firm also said emerging markets equities look attractive when compared with those of developed markets. The Cordos Capital forecast said a long-term view of emerging markets remains positive, especially with a growing middle class, pent-up consumer demand and young populations. The market, they said, is unmatched in their prospective return on investment.

    “We maintain our bullish stance on Nigerian equities, a view which has played out very well in 2012 amid an ongoing surge in the All Share Index. We believe that banks will continue to lead the way, with the consumer and construction industries poised for greater mark,” it said.

    The equities market made a sluggish start to 2012 following the bearish trend fuelled by profit warnings issued by United Bank for Africa, Diamond Bank and First City Monument Bank (FCMB) due to material write-downs on their non-performing loans. However, the equities market performed well in 2012 with a total return of 35 per cent.

    Market performance, they said, was impacted by the sustained investors confidence, economic growth trend, stable naira, impressive corporate earnings, robust investment horizon, attractive valuation of equities, increased activity of foreign portfolio managers, regulatory interventions, and recovery in the banking sector.

    Besides, they said the big shifts in monetary policy is unlikely in the first half of 2013, adding that in response to the global economic crisis, the Central Bank of Nigeria (CBN) pursued measures in 2009 and 2010 to promote growth and financial stability.

    However, in 2011 and 2012, the CBN tightened monetary policy to mop-up excess liquidity in the banking system and ward off inflationary pressures.The market pressures were stemming from high fiscal spending, the implementation of a new minimum wage and the injection of funds into the bank system through the purchase of non-performing loans through bonds issued by the Asset Management Corporation of Nigeria (AMCON).

    According to the firm, the Monetary Policy Rate (MPR), which was 6.25 per cent in September 2010, increased six times in 2011, to reach 12 per cent in December, 2011. The rate remained unchanged at 12 per cent in 2012. Similarly, the Cash Reserve Ratio (CRR) was increased steadily from one per cent in March to eight per cent in December 2011.

    It said a combination of renewed optimism over the state of the global economy, apparent easing of tension in Eurozone crisis, and aversion of the United States’ “fiscal cliff” suggests that interest ratecuts may be held back until the latter part of 2013.

    ”Our expectation is further premised on the fact that inflation remains elevated. However, we believe once inflation falls to within target, monetary policy loosening could come to the fore, leading to a 100 basis points cut to 11 per cent. They also projected that increased interest in the equities market would be sustained towards end of first quarter as investors continue to position for the full year results ahead,” it added.

    The analysts also said there is possibility that full deregulation of downstream oil sector and signing into law the Petroleum industry Bill will impact the oil and gas sector, leading to capital raising.

     

  • Analysts project 32% return on equities’

    The equity market could close with a year-to-date return of 32.05 per cent despite cash demand for the Yuletide and long holidays that tend to strain people financially, analysts have said.

    The stock market closed on the eve of the Christmas with a year-to-date return of 31.91 per cent.

    Analysts at FSDH Securities said they expected the market to round off within the remaining three trading days before the end of 2012 to close the year at 32.05 per cent.

    “We remain positive about the outlook of the equities market in the next few weeks. We expect the NSE All Share Index to close the year in the region of 32.05 per cent year to date. As a result of the festivity we expect intermittent upside coupled with profit taking to persist for the remainder of 2012,” FSDH stated in latest market review.

    The latest forecast followed the trend of optimism that has continued to trail equities, which are set to record their best performance in five years.

    Investment advisors at Cowry Asset Management Limited, FSDH Securities Limited and GTI Capital Limited among others had said the stock market would neutralise intermittent profit-taking dips and expected increase in demand for cash by the year end with upswings from bargain hunting and portfolio rebalancing as investors await full year returns of quoted companies.

    Analysts had stated that with the significant capital appreciation that delivered about N1.4 trillion capital gains in the third quarter, the market would witness a mix of bargainhuntingand profit-taking in the remaining months, with the thin-edge going to the upside by the end of the period.

    Analysts at Cowry Asset said the releaseof companies’thirdquarter results particularlyfrombanks and the continued influx of foreign portfolio investorsmay possibly push theASI beyonditscurrentposition.

    They noted that the expectations of final approval of the new Pension Fund InvestmentGuideline could trigger mild market rallies as PensionFund Administratorsre balance their port folio store flect new threshold.

    Investment advisors at FSDH said the macroeconomic developments in Nigeria and initiatives in the equities market should further drive the equities performance in the remaining period of the year.

    “Our expectation is hinged on the premise that most companies results released up till date have shown improved performances with wide margins against previous years. Albeit there are some challenges which may adversely impact the market, we are of the opinion that the equities market will close year 2012 remarkably better than it recorded in the last five years,” FSDH stated.

    Analysts said they expected the ASI to achieve a growth rate of 25.46 per cent in the second half of the year, thus nudging the full-year return to 32.05 per cent.

    Following the review and expectations of the financial market in the next one year, investment advisors at FSDH were bullish on equities and recommended portfolio allocation of 30 per cent, 10 per cent, 20 per cent, 20 per cent and 20 per cent in favour of equities, fund placement, treasury bills, mutual funds and bonds respectively.

    Looking beyond 2012, analysts at FSDH said their model portfolio should deliver a return of 16.17 per cent within the next one year given the prevailing macroeconomic situations.

    “An equity portfolio that invests in our carefully selected stocks, following the fund allocation and abiding by both entry and exit prices, should be able to record a return of 19.88 per cent. Meanwhile, the return on individual stocks is made up of both capital appreciation and dividend payments,” analysts advised.

     

  • Equities gain N324b

    Equities gain N324b

    •Investors scramble for year-end positions

    Market values of quoted companies onthe Nigerian Stock Exchange (NSE) rose by N324 billion last week as increased market orders for equities kept the stock market as a seller’s market all through the week.

    With 30.3 per cent and 68.6 per cent increase in volume and value of activities, average gain by equities closed the week at 3.80 per cent, pushing the year-to-date return at the NSE to 33.55 per cent.

    Totalmarket capitalisation of equities closed the week at N8.846 trillion, indicating an increase o N324 billion on the week’s opening market value of N8.522 trillion.

    The All Share Index (ASI)- the common value-based index that tracks price changes of all equities on the NSE, confirmed that the N324 billion increase was due to capital gains rather than supplementary listings or other adjustments. ASI increased similarly by 3.80 per cent to 27,685.54 points as against its opening index of 26,671.72 points.

    Pricing trend analysis showed widespread gains across sectors and stocks’ groups. While some investors appeared to be taking positions in low-priced stocks, several investors were comfortable with the blue-chip stocks.

    The NSE 30 Index, which tracks the 30 most capitalised stocks, performed above average with a weekly gain of 4.58 per cent. The NSE Consumer Goods Index rode on the back of Nestle Nigeria to post a weekly gain of 8.83 per cent. The NSE Banking Index indicated an increase of 2.67 per cent. The NSE Oil and Gas Index recovered 3.61 per cent gain while the NSE Lotus Islamic Index, which tracks a portfolio of Shari’ah-compliant stocks, improved by a 2.52 per cent. However, the NSE Insurance index dropped by 1.06 per cent, worsening the negative return in the sector.

    With 44 advancers to 25 decliners, the market was overly bullish during the week. But the overall market position was boosted by gains by large-cap stocks in the breweries, food and beverages, building materials and banking sectors.

    Nestle Nigeria was the most bullish stock with a net weekly gain of N49.95 to close at N710. Guinness Nigeria followed with a gain of N2.90 to close at N265. Nigerian Breweries rose by N21.45 to close at N165. Seven-Up Bottling Company rallied N4 to close at N44. Lafarge Cement Wapco Nigeria added N2 to close at N60. UAC of Nigeria gathered N1.97 to close at N43.98. Oando chalked up N1.93 to close at N14.03 while Guaranty Trust Bank and Okomu Oil Palm gained N1.26 and N1 to close at N21.50 and N35.

    Investors staked N14.64 billion on 1.93 billion shares in 22,650 deals last week, a marked increase over the turnover of 1.14 billion shares valued at N11.24 billion recorded in 18,947 deals two weeks ago.

    The financial services sector remained atop activity chart with a turnover of 1.57 billion shares valued at N10.55 billion in 14,207 deals. The conglomerates sector followed with 131.812 million shares valued at N180.81 million in 765 deals.

    On the downside, PZ Cussons Nigeria recorded the biggest loss of N1.65 to close at N27.05. MRS Oil Nigeria followed with a loss of N1.25 to close at N23.76. DN Meyer lost 75 kobo to close at N2.05 while Flour Mills of Nigeria and GlaxoSmithKline Consumer Nigeria dropped by 50 kobo each to close at N65 and N45.

     

     

  • ‘Equities will sustain bullish ride to 2013’

    Managing Director, Investment One Financial Services Limited, formerly GTB Asset Management Limited (GTBAM), Mr Nicholas Nyamali, has predicted that the bullish rally at the stock market would sustain through to the 2013 as investors continue to reflect improving fundamentals of quoted companies.

    He projected that average full-year return for the stock market in 2012 could close between 27 and 30 per cent just as the market would witness additional capital appreciation in 2013, especially in the immediate months after the first quarter reports, which are expected to be largely impressive.

    According to him, the year-to-date return of the market, which stands slightly above 27 per cent, is still normal considering the long-drawn declines in share prices of several companies in spite of continuous improvements in fundamentals.

    He noted that improvement in the fundamentals of quoted banks would provide further impetus for capital appreciation in 2013 citing the dominance of banks on the capitalisation and activity charts.

    “The market has been highly undervalued for several years; we must understand where we are coming from. So, we expect the market to continue to reflect corporate results in the months ahead,” Nyamali said.

    He, however, urged investors to learn from the experience of the past and solicit for adequate investment report and education before making their investment decisions.

    According to him, the main problem behind the market recession was fundamentally due to lack of investment knowledge as people were just not looking at the operational results and earnings of stocks in consideration for their share prices.

    Nyamali, who led the management buy out (MBO) of GTBAM when Guaranty Trust Bank Plc decided to sell its wealth and investment management subsidiary to comply with new banking regulatory regime, reiterated the commitments of Investment One to investors’ education.

    He said while the company would provide investment services and products that it would bill clients for, it will also maintain a parallel commitment to providing not-for-profit investment services including advisory services aimed at inculcating savings and investment habits in Nigerians and empower the generality of the people.

    He pointed out that in spite of the change of name to Investment One Financial Services Limited, the company remains essentially the same good old wealth management firm known for its excellent services and products.

    According to him, the company remains the same in terms of human resources, technologies, vision and values that have been its guiding light since its formation as a subsidiary of GTBank.

    “The name ‘Investment One’ mirrors our desire to be a one-stop shop for comprehensive investment services and the first point of call for insightful and innovative financial solutions. The name also reflects the firms’ strategic positioning as a service-oriented firm that is responsive to the investment needs of its customers,”Nyamali said.

  • Investors stake N200b on equities, bonds

    Investors staked N199.85 billion on quoted equities and bonds last week but the cautious optimism that later prevailed over the capital market could not totally erase the negative impact of bearishness that opened the week.

    While investors reduced stakes on equities, they stepped up investments in government bonds, a shift that reflected the largely negative pricing trend that opened the stock market.

    Total turnover on the Nigerian Stock Exchange (NSE) last week stood at 1.29 billion shares worth N9.41 billion in 19,825 deals as against turnover of 1.19 billion shares valued at N11.49 billion traded in 22,277 deals in previous week.

    At the over-the-counter (OTC) bond market, where Federal Government’s bonds are traded, turnover rose to 180.63 million units valued at N190.44 billion in 1,082 compared with 179.41 million units worth N187.51 billion exchanged in 1,196 deals two weeks ago.

    Although the overall pricing trend improved considerably by the middle of the week, the week-on-week market return still closed on the negative, particularly reflecting the major decline on Tuesday.

    The All Share Index (ASI), the benchmark common index that measures changes in prices of all quoted companies, closed the week with a drop of 1.19 per cent to close at 26,400.94 points. It had opened at 26,718.30 points.

    Aggregate market value of all quoted equities indicated net loss of N101.13 billion with closing value of N8.413 trillion. All main sectoral indices followed the overall downtrend. The NSE 30 Index, NSE Consumer Goods Index, NSE Banking Index, NSE Oil and Gas Index and NSE Lotus II Index dropped by 1.18 per cent, 1.48 per cent, 1.24 per cent, 2.65 per cent, and 1.47 per cent respectively. The NSE Insurance Index meanwhile appreciated by 0.29 per cent.

    Price movement analysis showed that 23 stocks appreciated while 43 stocks depreciated. The financial services sector accounted for 876.900 million shares valued at N5.328 billion in 11,454 deals. The oil and gas sector occupied the second position on the activity chart with a turnover of 135.055 million shares valued at N186.919 million in 1,161 deals. The consumer goods sector ranked third with 92.782 million shares valued at N3.119 billion through 3,850 deals.

    Altogether, the top three sectors accounted for 1.105 billion shares valued at N8.634 billion traded in 16,465 deals, thus accounting for 85.42 per cent, 91.71 per cent and 83.05 per cent of the volume, value and number of deals respectively. On stock-by-stock basis, Beco Petroleum Product Plc emerged the most active stock with a turnover of 105.093 million.

    Cadbury Nigeria Plc led the advancers with a weekly gain of N1.39 to close at N25.89 per share. NCR (Nigeria) followed with a gain of N1.31 to close at N14.40. Ashaka Cement added N89 kobo to close at N18.89 while UACN Property Development Company rose by 58 kobo to close at N11.98 per share.

     

  • Equities beat fixed-income securities

    Equities beat fixed-income securities

    Quoted equities have scaled up to the top of returns’ table among investment securities as sustained rallies continued to build up real positive return on investment for equities.
    The Nation’s check showed that most fixed-income securities opened this week several notches below average equity return, with gap as wide as five percentage points in some instances.
    Average return by equity opened this week at 22.22 per cent, 10 per cent above fixed-income benchmark Monetary Policy Rate (MPR) of 12 per cent and some 9.4 per cent real returns above current inflation rate of 12.8 per cent.
    Official data by the Central Bank of Nigeria (CBN) showed that 91-day Nigerian Treasury Bills currently carry a yield of 13.64 per cent while three-month tenor deposit rate of banks stand at 8.57 per cent. Average inter-bank call rate stands at 16.14 per cent.
    Market data showed that seven-day Nigerian Interbank Offer Rate (NIBOR) opened trading at 16.71 per cent while the 30-day and 90-day NIBOR started at 16.96 per cent and 17.33 per cent respectively.
    The Nation’s market intelligence shows that bonds currently have coupons of between 4.0 per cent and 19 per cent, indicating the yield spread within the fixed-income segment.
    Coupons or interest rates within the corporate bonds segment ranged between 10 per cent and 19 per cent. The UPDC 2015 bond issue carries the lowest interest at 10 per cent while Tower Funding Plc bond carries the highest rate of 19 per cent.
    In the sovereign bond segment, the five-year tenor Federal Government of Nigeria April 2015 bond has the lowest interest rate of 4.0 per cent while the 10-year long-term bond due for maturity in 2012 has the highest rate of 16.39 per cent.
    Sub-national bonds-comprising mainly of bonds by state governments, indicated return range of between 10 to 15.5 per cent. The N57.5 billion seven-year Lagos State Government bond carries the lowest coupon of 10 per cent while Imo State Fixed Rate Redeemable Bond indicates highest rate of 15.50 per cent.
    Market analysts said the improvement in returns at the equity market could lead to bandwagon gains as late adopters follow the track of the bullish rally.
    Investment analyst, TWR Stockbrokers Limited, Abdu-Rasheed Momoh, said equities still have headroom for growth, noting that market’s benchmark index could rise as high as 27,000 points, after some initial resistance. This implies possible addition of some eight percentage points to reach average return of 30.2 per cent.
    “My own momentum indicators, which are short-term, still indicate a positive trend, and the overall index is still below the middle of the trading ranges of the individual components,” Momoh indicated.
    He outlined that several stocks including Access Bank; Chemical & Allied Products, Evans Medical, First Bank of Nigeria, Guaranty Trust Bank, Okomu Oil Palm, Presco, Nestle Nigeria and Zenith Bank among others were still below resistant levels.
    He however, cautioned that the few stocks that have been leading the pack might not have the capacity to move the overall average return as they approach their five to eight- year resistant levels, except new bull leaders take over.
    Analysts at Partnership Investment Company Plc also shared the optimism that equities would sustain its lead noting that substantial upswing would remain, in spite of expected profit-taking transactions.
    “Some stocks however, still trade below their intrinsic value and are a pick for bargain hunters and value investors,” analysts stated.

  • Equities lose N33b as profit-taking persists

    Investors continued to cash in substantial capital gains on equities as profit-taking trading that started the week extended a bit further yesterday, shaving off N33 billion from aggregate market value of quoted equities.

    The All Share Index (ASI) and aggregate market value of equities, the two main value-based indices at the Nigerian Stock Exchange (NSE) dropped by 0.42 per cent as investors monetised substantial gains on several highly capitalised stocks. The second consecutive decline pushed the year-to-date return at NSE to 18.51 per cent.

    Market capitalisation of all quoted equities slipped from N7.854 trillion to N7.821 trillion. The ASI declined to 24,568.57 points as against its opening index of 24,671.47 points.

    The downtrend was orchestrated by losses recorded by stocks such as Nigerian Breweries, Cadbury Nigeria, UAC of Nigeria, Ashaka Cement, First Bank of Nigeria, GlaxoSmithKline Consumer Nigeria and Union Bank of Nigeria, all of which had recorded double digit capital appreciation in recent period.

    Nigerian Breweries led the decliners with a loss of N2.05 to close at N125.45. Cadbury Nigeria followed with a loss of N1.04 to close at N19.86. UACN dropped by 65 kobo to N35.41. Ashaka Cement lost 57 kobo to close at N11.17. GlaxoSmithKline dropped by 50 kobo to N32. Presco slipped by 48 kobo to N14.42. First Bank lost 32 kobo to close at N13.98 while Union Bank dropped 30 kobo to close at N6.21.

    However, several stocks showed strong resilience against the general downtrend. Unilever Nigeria set a new high with a gain of 92 kobo to close at N38.91. Guinness Nigeria also added 70 kobo to close at N252.90. International Breweries rose by 56 kobo to N11.77. Mobil Oil Nigeria gained 50 kobo to close at N115. Lafarge  Cement Wapco Nigeria added 47 kobo to close at N46.02. Roads chalked up 40 kobo to close at N8.42 while Access Bank Plc, which declared an interim dividend of 25 kobo, gathered 24 kobo to close at N8.74.

    Total turnover stood at 265.774 million shares worth N2.579 billion in 4,955 deals. The financial services sector remained atop activity chart with a turnover of 221.203 million shares worth N2.031 billion in 3,194 deals.

  • New pension guidelines to boost equities with N400b

     

    President, Chartered Institute of Stockbrokers (CIS), Mr Ariyo Olushekun

    The proposed amendments to the pension funds’ investment guidelines may see inflow of more than N400 billion into quoted equities as key stakeholders canvass higher minimum equity investment benchmark for pension fund administrators.
    Total pension asset under administration is around N2.6 trillion, according to recent checks with the National Pension Commission (Pencom). Equity investment by pension fund administrators is estimated at about 11 per cent of total assets under management.
    New amendments being pushed by the National Assembly, stockbrokers, capital market regulators, fund managers and some other interested parties seek to set a minimum equity investment benchmark of between 15 and 25 per cent for pension funds managers.
    The House of Representatives has already adopted a report calling on the PenCom to reverse the current limit for equity investment and replace it with a minimum benchmark of 25 per cent.
    Resolution 28 of the Report of the House of Representatives Ad Hoc Committee on Capital Market, which was recently adopted, recommended that: in order to deepen the equity market, that Pension Commission should reverse the policy that restricts PFAs from investing a maximum of 25 per cent of their portfolios in equities; that Pension Commission should formulate a policy that Pension Funds Administrators should invest a minimum of 25 per cent of their portfolio holdings in viable equities.
    The report of the Ad Hoc Committee has been forwarded to the Presidency upon request by President Goodluck Jonathan.
    Industry sources said PenCom was already favourably disposed to setting a minimum benchmark of about 10 per cent for equity investment, a move that will mandate many pension fund managers who had taken advantage of absence of a minimum benchmark to hold lesser interests in equities to rebalance their portfolios.
    Stockbrokers have canvassed graduated minimum investment scale that would ensure up to 25 per cent of pension funds are compulsorily invested in equities.
    President, Chartered Institute of Stockbrokers (CIS), Mr Ariyo Olushekun, said pension fund administrators should be mandated to invest minimum of up to 25 per cent in equities contrary to minimum of 10 per cent being considered by PenCom.
    He also advocated a higher maximum limit of 50 per cent, which would give flexibility to aggressive fund managers to play in the equities market without violating any rule.
    According to him, aggressively managed funds should be able to invest minimum of 25 per cent in equities while medium and short-term funds should be mandated to invest at least 15 per cent and 10 per cent respectively.
    He noted that pension funds as collective assets of the Nigerian people should be used as catalyst for the Nigerian capital market, which would in turn impact on the nation’s economic development.
    Olushekun added that Nigeria’s sovereign funds should be invested in the Nigerian capital market, noting that such funds could serve as stabilizer for the market.
    “It does not make sense for Nigeria to take funds out of its economy and invest in other economies, thus helping other economies to grow. We should invest our funds to develop our own economy,” Olushekun said.
    He outlined the need for government to implement a market-focused recovery plan that would reduce debt overhang, increase liquidity and encourage quoted companies.
    He added that government should reduce tax payable by quoted companies to encourage companies to list their shares, pointing out that taxes such as stamp duty, value added tax (VAT) and contract stamp should be removed.

  • ‘Third quarter earnings will lift equities further’

    Amidst concerns about the sustainability of the bullish rally at the stock market, market pundits and analysts have said expectations of good third quarter earnings by quoted companies would give fillip to market recovery through to the last quarter.
    Major investment advisers and fund managers said the market was still skewed for upswing citing substantial undervaluation of several equities and good interim earnings reports by companies.
    Managing director, GTI Securities, Mr Tunde Oyekunle, said third quarter earnings reports would provide impetus for a new round of strong rally as investors anticipate better returns by the year-end.
    According to him, while equities have run creditably well in recent weeks on positive investors’ sentiments on returns prospects and valuations, third quarter earnings would enhance the market’s recovery.
    He noted that although profit-taking transactions may weigh in later this month, early results for the nine-month period ended September 30, 2012 which are expected in middle of next month would further wet investors’ appetite.
    Post-listing rules of Nigerian Stock Exchange (NSE) requires that audited annual accounts of companies should be submitted within three months after the year end while quarterly financial statements are expected to be made available 45 days after the end of the quarter.
    Regulatory filing calendar made available by the NSE indicated that companies are expected to have fully submitted their third quarter earnings report by Thursday, November 15, 2012.
    Managing Director, Financial Derivatives Company (FDC) Limited, Mr Bismarck Rewane, said the improving fundamentals of quoted companies should point to a higher market.
    According to him, several international investors are taking tentative positions in fundamentally strong companies ahead of the earnings season.
    He pointed out that banking, food and beverages, agriculture and brewery sectors hold greater prospects for returns to investors.
    Rewane predicted that the market would likely gain 5.0 per cent this month to sustain its month-on-month rally in this quarter.
    He advised investors to look out for three key variables of earnings growth, quality and sustainability of business model and valuation and versatility in determining the best stocks to pick.
    According to him, the most important attribute of a winning stock is its earnings growth profile while the quality of a company’s products, balance sheet and management as well as comparative valuation to its peers would complement the resilience of such stock in any market situation.
    He noted that in spite of the sustained rally witnessed recently which signaled the commencement of a bull rally, the Nigerian market remains the only one that has not recovered its losses as it is still some 60 per cent below its peak in 2008.
    Analysts at FSDH Securities said they expected that equities market would continue to receive positive investors’ sentiment as investors seek value in fundamentally strong stocks in the face of dwindling yields in the fixed income market.
    They noted that though there could be profit-taking transactions, there were still several stocks with fundamentals that can generate good returns.
    Analysts said they expected average return by equities to retain some additional gains by the end of this month, in spite of accumulated gains that may tempt investors to increase shares supply.
    The Nigerian stock market opened this week with average year-to-date return of 19.82 per cent.
    Although most analysts were still cautious about the short-term outlook of the market, they agreed that impressive third quarter earnings would significantly enhance the attractions of low-priced equities.
    According to analysts, with potential dividend yields on several stocks in double-digits, most discerning investors might find the stock market more attractive than largely single-digit offering of the fixed-income markets.