New Telegraph

Shareholders lose N40bn in oil, gas stocks

Oil and gas firms listed on the main and premium boards of the nation’s equities market reported a loss of about N40.454 billion in November 2021 following profit taking in the sector during the month. Checks by New Telegraph revealed that the oil and gas subsector lost N40.454 billion or 6.41 per cent to close at N589.909 billion in market capitalisation on November 30, in contrast to opening figure of N630.363 billion on November 1. According to Cowry Research, “we expect the local stock market index to trade sideways as investors turn some of their shareholdings to cash ahead of the yuletide season. Nevertheless, we feel this move would create ample opportunity for medium to longterm investors to buy cheaply.”

However, speaking on the outlook for the rest of the sector, David Adonri, Managing Director/CEO, Highcap Securities Limited, said: “If the results and dividends announced by major companies are impressive and if the rally in crude oil price is sustained and if yield on debt does not go higher, demand for equities may increase and stem the tide of decline.” Ayodeji Ebo, Senior Economist/ Head, Research & Strategy, Greenwich Merchant Bank, said: “Rising fixed income yields will continue to suppress the performance of the equities market, however, influx of impressive financial performance and corporate actions will reduce the impact. “Investors will cherry pick stocks with good fundamentals. However, as full year corporate actions releases wind down, we expect the equities market to dip, presenting new entry opportunities.” Toyin Sanni, CEO, Emerging Africa Capital Group, said: “There is likely going to be a rebound in the market as investors buy back at discounts and also position themselves to meet the closure of register deadlines for dividend payment, which have been announced. “Listed companies are positioned to record positive performances in the first quarter of the year 2021 as the COVID- 19 recovery kicks in and economic activities return to normal.

This could contribute to a significant uptrend in the market as a response. “However, if the yields in the money market and fixed income space continue to increase at their current pace, it could lead to outflow of funds from the stock market in the longer run, leading to a bearish performance. “The recent improvement in the rate environment in the USA could also lead to foreign capital flowing out of the Nigerian markets to a more stable environment.” On demand, analysts at Cordros Capital said: “We expect the resumption of full economic activities to continue supporting product demand. Specifically, we envisage improved demand from the manufacturing and transport sectors. “For supply, we expect individual product sourcing to remain challenging for downstream players as structural issues such as FX illiquidity persist. Thus, we expect the NNPC to remain the sole market supplier until at least 2022, when the Dangote Refinery comes on stream.”

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