Nigerian Equities Lead Global Stocks With N646bn Gain
Nigerian equities emerged at the weekend atop the global returns table for the world’s stock markets as a strong rally in the communication and technology stocks drove the Nigerian market to a net capital gain of N646 billion in five trading sessions.
Nigerian benchmark equities indices closed above returns by several tracked global advanced and emerging stock indices. The global stock market outlook was a mixed grill with decline in United States of America (U.S.A) and upswings in United Kingdom, Europe and Asia.
The All Share Index (ASI)- the value-based index that tracks all share prices on the Nigerian Exchange (NGX) Limited; posted average return of 2.95 per cent; equivalent to net capital gain of N646 billion, more than a double of the closest returns by other global stock markets.
With inflation fuelling uncertainty in the U.S.A, the Dow Jones Industrial Average (DJIA) declined by 1.1 per cent while its twin index S & P dropped by 1.0 per cent. Meanwhile, in London, the benchmark FTSE 100 Index appreciated by 0.8 per cent. The STOXX Europe, which tracks the general European markets posted average return of 0.5 per cent. In Asia, Japan’s Nikkei 225 Index closed flat while China’s SSE Index appreciated by 1.4 per rent. The MSCI EM, which tracks emerging markets, posted average gain of 1.4 per cent while its counterpart MSCI FM, which tracks frontier markets, depreciated by 0.1 per cent.
The ASI rose from the week’s opening index of 42, 014.50 points to close weekend at 43,253.01 points, representing average return of 2.95 per cent. The week’s rally nudged the average year-to-date return for Nigerian equities to 7.41 per cent.
Aggregate market value of all quoted equities on the NGX rose from the week’s opening value of N21.926 trillion to close weekend at N22.572 trillion, an increase of N646 billion or 2.95 per cent. The rally at the Nigerian market was driven by investors’ appetite for large stocks; especially telcos.
The rally also saw increase in turnover of at the Nigerian market. Total turnover last week stood at 1.471 billion shares worth N20.941 billion in 20,410 deals as against a total of 1.428 billion shares valued at N12.373 billion traded in 23,987 deals two weeks ago.
The financial services industry led the activity chart with 996.555 million shares valued at N10.279 billion traded in 10,565 deals; thus contributing 67.74 percent and 49.09 percent to the total equity turnover volume and value respectively. The conglomerates industry followed with 203.251 million shares worth N1.204 billion in 834 deals while the consumer goods industry placed third with a turnover of 105.410 million shares worth N3.217 billion in 2,789 deals.
The top three equities were FBN Holdings Plc, Sterling Bank Plc and UACN Plc which altogether accounted for 519.011 million shares worth N4.057 billion in 1,787 deals, contributing 35.28 percent and 19.37 percent to the total equity turnover volume and value respectively.
Most analysts remained optimistic about the outlook for the Nigerian equities as the market draws nearer to the year-end.
Analysts at Cowry Asset Management said they expected the ASI to close positive in the week ahead as investors take advantage of some fundamentally sound stocks.
“Also, we feel investors will continue to position in those companies that have printed higher profitability and are likely to pay good dividends in financial year 2021” Cowry Asset Management stated.
Analysts at Cordros Capital Group were however cautious noting that investors would trade cautiously while taking positions in stocks with attractive dividend yields ahead of 2021 full year dividend declarations.
“In addition, we believe the outcome of the bond auction scheduled to hold during the week will also shape market sentiments. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings” Cordros capital stated.