Weekly Market Review & Stock Recommendations – August 30, 2021
Dear Client/Reader,
Global Economic Roundup
Oil Rebounds 3% After Seven-Day Losing Streak
Oil prices jumped 3% early on Monday, snapping the longest losing streak since 2019 of seven consecutive settlements in the red, as investor risk appetite increased and the U.S. dollar softened. As of 8:04 a.m. EDT on Monday, WTI Crude had jumped by 3.19% at $64.10 and the prompt price of Brent Crude traded up 3.24% at $67.27. Last week, the strengthening U.S. dollar, the surging Delta variant cases in major economies, and the Fed’s signal that it would start tapering stimulus sparked a sell-off on the markets, with risk assets and commodities hammered the worst.
U.S. Stocks Rise on Powell’s Dovish Taper Tone
U.S. equities gained to record highs after a key speech by Jerome Powell, in which the Federal Reserve chair reinforced the message that it would be appropriate to begin tapering the Fed’s bond purchases by the end of the year. The S&P 500 and Nasdaq 100 rose during the much-anticipated address from the Jackson Hole symposium, where traders had hoped to gain more insight into the central bank’s thinking about unwinding stimulus. Treasury yields fell and the dollar was weaker against peers. U.S. equities rose earlier on Monday as U.S. regulators granted full approval for the vaccine made by Pfizer Inc. and BioNTech, a milestone expected to help bolster the immunization drive amid a renewed surge in infections.
President Buhari announces N287 billion after tax profit by NNPC
President Muhammadu Buhari, who doubles as the substantive Minister of Petroleum Resources, has announced that the state-owned oil company, the Nigerian National Petroleum Corporation (NNPC), posted a Profit after Tax of N287 billion for the year 2020. The declaration by the president was in fulfilment of an earlier pledge by the Federal Government to publicly announce the financial position of the NNPC. The president who made the declaration, noted that the net profit was the first in the 44-year history of the establishment. The announcement of the profit is coming about a week after the Federal Government said that the NNPC is set to turn to a full-fledged commercial entity as it will become a limited liability company within the next 6 months.
Some of our recommended stocks are mentioned below;
ZENITH BANK PLC:
Zenith Plc Q2’2021 result showed that Net interest income increased marginally by 1.61% to N159.94bn in Q2’2021 from N157.4bn in Q2’2020. Profit before tax advanced by 2.57% from N114.12bn recorded in Q2’2020 to N117bn in the current period. Profit after tax grew by 2.21% from N103.83bn in Q2’2020 to N106.12bn in Q2’2021, despite a 6.23% increase in income tax expense. Consequently, earnings per share went up by 2.42% from N3.30 in Q2’2020 to N3.38 in Q2’2021. Zenith Bank has a BVPS of N36.42, P/BV of 0.67x and P/E ratio of 3.61x.
FBNH PLC:
FBN Holdings Plc. Q2 2021 results showed that Net interest income declined by 20.91% from N131 bn in Q2’2020 to N103 bn in the current period. Operating profit increased by 9.26% from N41.55bn in Q2 2020 to N45.40bn in Q2 2021. Profit before tax advanced by 9% from N41.4bn in Q2’2020 to N45.2bn in the current period. Profit after tax went up by 6.86% from N35.64bn in Q2’2020 to N38.08 bn in the current period. Consequently, FBNH recorded a 22% drop in earnings per share from N1.35 in Q2’2020 to N1.05 in Q2’2021. FBNH has a BVPS of N21.51, P/BV of
0.35x and a P/E ratio of 3.57x.
Please find here our Weekly Market Review & Stock Recommendations for this week.
