Equity defies yuletide lull as investors gain N1.3tr in week

With the rising inflation throwing other investment windows into a negative real return, the Nigerian equity market, last week, witnessed another unprecedented rally that pushed the All-Share Index (ASI) by 7.5 per cent, the highest weekly gain in five weeks. It closed at 36,804.75 points, the highest level obtained since July 31, 2018.

Last week, the market witnessed sustained gains for the five trading sessions as the Nigerian Stock Exchange (NSE) ASI appreciated by 7.46 per cent to close the week at 36,804.75 while market capitalisation rose by N1.3 trillion to close at N19.236 trillion.

Similarly, all other indices finished higher while the NSE ASeM and NSE Growth Indices closed flat. Analysts linked the bull run to foreign investor interest in Airtel (+21.0 per cent) and bargain hunting in Dangote Cement (+14.5 per cent) and MTNN (+3.2 per cent).

The development triggered a month-to-date increase of five per cent and a year-to-date return of 37.1 per cent.
Analysts at Afrinvest said: “We anticipate a sustained bullish performance in the coming week as investors position in undervalued stocks.

Investdata Consulting Limited said: “Money flow index revealed the entrance of funds into the equity space amidst the low-interest rates regime and rising inflation that has further thrown other investment windows into a negative real return.”

Codros Securities said: “In the short term, we still see scope for expansion in valuation multiples as the hunt for alpha-yielding opportunities in the face of increasingly negative real returns in the fixed income market remains positive for stocks.

“However, we advise investors to take positions in only fundamentally-justified stocks as the weak macro environment remains a significant headwind for corporate earnings.”

A breakdown of market performance last week showed that the equities market reopened the week on a positive note, causing the ASI to appreciate by 1.73 per cent due to buying interest in Dangote Cement and 25 other stocks.

The ASI rose by 592.70 points or 1.73 per cent to 34,843.44 points. Also, investors gained N309 billion in value as market capitalisation went up to N18.211 trillion.

The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Airtel Africa, Dangote Cement, Guinness Nigeria, Lafarge Africa and BOC Gases Nigeria.

The stock market extended its gaining streak on Tuesday, resulting in a further rise in market capitalisation by N200 billion. The ASI gained 381.78 absolute points, representing a gain of 1.10 per cent to close at 35,225.22 points. Similarly, the overall market capitalisation value appreciated by N200 billion to close at N18.411 trillion.

The uptrend was driven by price appreciation in medium and large capitalised stocks amongst which are; Dangote Cement, Lafarge Africa, Zenith Bank, Guaranty Trust Bank and Guinness Nigeria.

More blue-chip stocks joined the league of gainers at the close of transactions on Wednesday, causing investors’ wealth to appreciate further by N140 billion.

At the close of trading on Wednesday, the ASI increased by 267.93 absolute points, representing a growth of 0.76 per cent to close at 35,493.15 points. Similarly, the market capitalisation gained N140 billion to close at N18.551 trillion.

The upturn was impacted by gains in medium and large capitalised stocks, amongst, which are; Nestle Nigeria, Flour Mills of Nigeria, Guinness Nigeria, Zenith Bank and Guaranty Trust Bank

The bulls sustained dominance on the NSE on Thursday, as virtually all the blue-chip stocks, especially Airtel Africa and Ardova appreciated, causing market capitalisation to increase further by N390 billion.

The index gained 746.47 absolute points, representing a growth of 2.10 per cent to close at 36,239.62 points. Similarly, market capitalisation is appreciated by N390 billion to close at N18.941 trillion.

The uptrend was driven by price appreciation in medium and large capitalised stocks among which are; Airtel Africa, Dangote Cement, Okomu Oil, Unilever Nigeria and Ardova Plc.

Further analysis of last week’s transactions indicated that a turnover of 1.893 billion shares worth N17.647 billion was recorded in 20,660 deals by investors on the exchange, in contrast to a total of 2.265 billion shares valued at N20.990 billion that changed hands in 23,722 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 1.489 billion shares valued at N8.385 billion traded in 10,834 deals; thus contributing 78.65 per cent to the total equity turnover volume. The consumer goods industry followed with 106.986 million shares worth N2.360 billion in 3,447 deals.

The third place was the services industry, with a turnover of 74.754 million shares worth N191.833 million in 448 deals. Trading in the top three equities namely Jaiz Bank Plc, FBN Holdings Plc and Niger Insurance Plc (measured by volume) accounted for 761.866 million shares worth N1.468 billion in 1,395 deals, contributing 40.25 per cent to the total equity turnover volume.

A total of 412,358 units of Exchange Traded Fund (ETF) valued at N1.396 billion were traded in 40 deals last week, compared to a total of 292,510 units valued at N2.270 billion that was exchanged in 45 deals during the preceding week.

Also, 47,699 units of bonds, valued at N53.129 million were traded last week in 22 deals compared with a total of 13,555 units worth N17.369 million that changed hands in eight deals during the preceding week.

On the price movement chart, 53 equities appreciated last week, higher than thirteen 13 equities in the previous week. 17 equities depreciated, lower than 46 equities in the previous week, while 91 equities remained unchanged, lower than102 recorded in the previous week.