Q3 earnings announcements seen shaping market direction

The third-quarter ( Q 3 ) e a r n i ng s s e a s o n w h i c h has entered full gears is shaping the direction of Nigerian equities market. As investors continue to consider corporate earnings, the local bourse got some strength in the second trading session of this week with banking sector stocks setting the pace; the market had turned negative at week open. An underlying sentiment suggests that stock investors are still cautiously optimistic about the equities space due to weak economic recovery and their expectation of Q3 modest earnings. So far, the Q3’16 results r e l e a s e d a t t h e l o c a l bourse have shown mixed performance across sectors as companies faced Nigeria’s challenging macro pressure. “We believe investor mood will continue to hinge on corporate earnings as the final set of earnings come in”, according to research analysts at Lagos-based Vetiva Capital Management Limited. Prior to the Q3 driven r e n e w e d a p p e t i t e f o r Ni g e r i a n e q u i t i e s, t h e NSE All-Share Index had depreciated by 1.10% to close last week at 27,294.21 points while the equities market capitalization depleted to N9.375 trillion. All other Indices had finished higher last week with the exception of the NSE Premium, NSE 30, NSE Banking, NSE Insurance Indices that depreciated by 3.53percent, 0.43percent, 0.44percent, and 0.29percent. “This past week saw the equities market extend losses, as weak sentiment drove sell-offs across sectors. Earnings scorecards were broadly unimpressive for key names that released 9-month results as macro pressure continues to bite. We expect sentiment to be mixed this week, albeit with a bearish bias, with Q3 earnings numbers likely to remain the dominant theme that will dictate overall market direction in the interim,” said research analysts at another Lagos-based investment house, United Capital plc.