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Investors scout for banking stocks
Nigerian equities outperformed most global stocks as renewed bargain-hunting by foreign and domestic investors spurred the market to net capital gain of N1.325 trillion.
At an average return of 3.89 per cent – the five-day return by Nigerian equities – was the highest among several leading advanced, emerging, and frontier markets tracked at the weekend.
Trading reports at the weekend showed a market-wide scramble for Nigerian stocks with nearly four out of every five deals closed at a premium price, a major indication of investors’ appetite.
The rally pushed Nigeria’s average year-to-date return for Nigerian equities to 26.83 per cent, within the top 10 global best returns. The year-to-date return represents some four percentage points above the country inflation rate of 22.79 per cent. This places quoted equities as hedges against Nigeria’s stubborn inflation rate, which is tracking at an 18-year high.
The All Share Index (ASI) – the value-based common index that tracks all share prices at the Nigerian Exchange (NGX) – closed weekend at 65,003.39 points, an increase of 3.89 per cent on 62,569.73 points recorded at the beginning of the week.
Aggregate market value of all quoted equities also rose from the week’s opening value of N34.070 trillion to close weekend at N35.395 trillion, an increase of 3.89 per cent or N1.325 trillion.
The congruence between the ASI- a value-weighted index and ordinary total market value underlines the fact that the increase in market value was due to share price appreciation, rather than primary changes in prices or volumes of shares; such as revaluation and new listings.
The Nigerian stock market performance outran all major global markets; in a largely bullish trading week.
In the United States, the Dow Jones Industrial Average (DJIA) recorded an average return of 2.1 percent while S & P 500 Index recorded 0.7 per cent for the week.
United Kingdom’s FTSE 100 Index dropped by 2.77 per cent. Japan’s Nikkei 225 dropped by 0.3 percent. Germany’s DAX Index appreciated by 0.45 per cent.
France’s CAC 40 Index posted an average return of 0.8 per cent.
Ghana GSE Index declined by 0.03 per cent while Egypt’s EGX 30 Index rose by 1.36 per cent.
The MSCI EM Index, which tracks emerging markets, dropped by 0.1 per cent while the MSCI FM Index recorded a modest gain of 0.3 per cent.
Most analysts said they expected Nigerian equities to sustain their upswing as companies rush to meet the June 30, 2023 deadline for submission of second-quarter earnings reports.
Futureview Financial Services stated that it anticipated “a bullish sentiment in the equities market” as firms release their half-year results.
“In the interim, we expect the full swing of the half-year 2023 earnings season to dictate market sentiments and possibly drive positive performance as investors hunt for bargains in fundamentally sound stocks with a consistent history of interim dividend payments,” Cordros Securities stated.
Analysts also expected the outcome of the two-day meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), which begins today, to dictate the movement of yields in the fixed-income market, which has an inverse relationship with the equities market.
The NGX has attributed the market performance to the “audacious macroeconomic reforms under the new administration” of President Bola Tinubu. Market operators were of the view that “the policies of the new administration under President Bola Tinubu” had “led to the rise in the fortunes of investors”.
In barely a month, the Tinubu administration has given effect to the stoppage of the 46-year-old fuel subsidy, abolished the multiple forex rates, and instituted probes into major issues of public finance.
Peoplesmind
