How Negative Investor Sentiment overshadowed Companies’ Results in March – Vetiva

A negative investor sentiment that prevailed over the Nigerian stock market environment in March overshadowed the sterling performance of many listed companies whose stock prices fell in the last month of the first quarter.

Consequently, the earnings statements by the corporates and banks failed to lift the prices of equities, says Vetiva Capital Management Limited in its latest research report.

• NIGERIA DAILY: Uncertainty Casts Shadows Over PDP’s Zoning Arrangement
• Nigeria: losing its most valuable asset

“Investor sentiment turned negative in March, as earnings releases and dividend declarations failed to lift stock prices amid the ongoing conflict in Ukraine, which created a fair amount of uncertainty over the state of the world economy,” Vetiva Research wrote its Equity Research dated April 5.

While it said all classes of stocks were affected by the negative sentiment, the report pointed out that the banks were the worst hit. “Banks were the worst hit by sell-offs in March. Despite posting positive results and increasing their dividend payout, investors were unimpressed, selling down ZENITHBANK by 17% during the month,” the report said.

Zenith Bank reported a 6.07 percent rise in profit after tax to N244.5 billion for the year ended December 2021. The bank announced a dividend of N2.8 per share, up from the N2.8 per share it paid in the preceding year.

Vetiva noted further that reports of record profits and completion of its transition to a Holding Company structure were not enough to sway investors in favour of the newly listed Access Bank, as they sold the stock down 6 percent month-on-month.

Among the lenders under Vetiva’s coverage, only Fidelity Bank was the only positive banking stock in its portfolio, gaining 7% m/m and contributing 0.7% to Vetiva’s overall portfolio return.

Access Bank announced a 51 percent rise in its profit after tax to N160.2 billion for the 2021 financial year, from N106 billion a year earlier. The Bank gave a final dividend of 70 kobo, having given an interim dividend of 30 kobo per share earlier.

Concluding on the banking stocks included in the portfolio, Vetiva said Fidelity Bank was the only positive banking stock in its portfolio, gaining 7%, month-on-month, with a 0.7% contribution to the return on the portfolio. Were the investors trying to take positions before the Bank’s full-year 2021 result that was released on April 1? That result showed that the bank grew its profit before tax by 33.5 percent to N35.58 billion, from N26.65 billion a year earlier. Fidelity declared a dividend of 35kbob per share. At a price of about N3.20 per share on the day the result was released, that gave a dividend yield of about 10.9 per cent.

The poor performance extended to the industrials, where WAPCO fell by 12.1 per cent, while the sector leader, Dangote Cement, ended flat.

Expectedly, oil gas stocks were part of the strongest performers within the month, contributing 1.2% to Vetiva’s portfolio for the month.  Vetiva attributed this spike in the prices of oil and gas stocks to “stronger crude prices, which were supported by concerns over supply shortages”.