Nigerian Stocks Beat Global Stocks With N259bn Gains
Nigerian stocks played the contrarian at the weekend with a net capital gain of N259 billion in a week marked by general decline in share prices across the global advanced and emerging markets.
A market-wide rally drove the Nigerian market to average gain of 1.27 per cent at the weekend, equivalent to net capital gains of N259 billion. The rally moderated the negative average year-to-date return for Nigerian equities to -2.41 per cent.
The positive performance of Nigerian equities bucked the generally negative performance of the global markets as hints of policy changes in the United States triggered a shockwave across the markets. In the United States, the Dow Jones Industrial Average (DJIA) dropped by 1.1 per cent while the S & P declined by 1.2 per cent. United Kingdom FTSE 100 depreciated by 1.4 per cent. Japan’s Nikkei 225 dropped by 2.2 per cent while STOXX Europe, which tracks the larger European market, declined by 0.9 per cent.
Nigeria’s benchmark equities index, the All Share Index (ASI) of the Nigerian Exchange (NGX) Limited, the new trading name of the demutualised Nigerian Stock Exchange (NSE), rose from its week’s opening index of 38,808.01 points to close at 39,301.82 points. Aggregate market value of all quoted equities also rose from its week’s opening value of N20.310 trillion to close weekend at N20.569 trillion.
Review of the trading reports showed that the rally was driven by bargain-hunting across the sectors , especially the banking sector, as investors realigned portfolios in expectation of first quarter earnings.
The NGX Banking Index recorded above-average gain of 4.82 per cent. The NGX 30 Index, which tracks the 30 largest stocks on the Exchange, appreciated by 1.64 per cent. The NGX Consumer Goods Index rose by 1.05 per cent. The NGX Oil and Gas Index gained 0.29 per cent. The NGX Industrial Goods Index rose by 0.50 per cent while the NGX Insurance Index closed with average gain of 0.40 per cent for the week.
Analysts agreed that the market was driven primarily by bargain-hunting for first quarter earnings. Afrinvest Securities said investors were cherry-picking stocks on the back of impressive first quarter earnings.
“Bargain hunting in banking stocks was the overarching theme during the week as investors flocked into banking names ahead of first quarter 2021 corporate earnings releases,” Cordros Securities noted.
Analysts at Cordros Securities said they expected the market to be flooded with results as the first quarter 2021 earnings season commences in full swing.
“We believe investors will be looking for clues on how corporate earnings will evolve in 2021, given the expected improvement in macroeconomic conditions. The local bourse is likely to close positive next week as we expect decent earnings releases across the board to temper selling activities stoked by the rising yields in the fixed-income market,” Cordros Securities stated.
Analysts advised investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.
Total turnover at the NGX stood at 1.602 billion shares worth N42.142 billion in 19,507 deals as against a total of 1.263 billion shares valued at N10.759 billion traded in 19,975 deals two weeks ago.
The financial services industry led the activity chart with 1.029 billion shares valued at N9.188 billion traded in 11,095 deals; thus contributing 64.22 per cent and 21.80 per cent to the total equity turnover volume and value respectively. The ICT industry followed with 215.482 million shares worth N29.855 billion in 566 deals while the in third place was conglomerates industry, with a turnover of 118.458 million shares worth N675.954 million in 1,088 deals.