•Equities sustain rally with N396b gain
Investors appeared to have hugely discounted political risks and are less fearful of the outcomes of the February 2023 national elections as Nigerian equities continued their chart-leading rally with net capital gain of about N396 billion at the weekend.
With average return of 1.51 per cent over the week , average year-to-date return at the Nigerian equities market rallied to 14.43 per cent at the weekend. The sustained rally over the past four weeks has strengthened the possibility of the stock market closing 2022 with its third consecutive positive full-year return.
The recent bullish trend bucked the noticed pattern of trading in previous pre-election years; which were marked with palpable fears and selloffs at the stock market. Nigerian equities had lost 16 per cent in 2014 ahead of the 2015 polls and repeated the same pattern with 18 per cent average loss in 2018 prior to the 2019 general elections.
All key indicators at the Nigerian stock market at the weekend pointed to widespread positive sentiments with increased trading volume driving share prices higher.
The All Share Index (ASI)- the common value-based index that tracks all share prices at the Nigerian Exchange (NGX) rose from the week’s opening index of 48,154.65 points to close weekend at 48,881.93 points. Aggregate market value of all quoted equities at the NGX also rose simultaneously from its week’s opening value of N26.229 trillion to close weekend at N26.625 trillion
The market outperformed several advanced and emerging markets and was one of the contrarians in a week marked with mixed global performance. Share prices declined in United States and United Kingdom but the Chinese and Japanese markets were positive. The STOXX Europe which tracks European markets posted average decline of 1.8 per cent. The MSCI EM Index which tracks emerging markets dropped by 0.5 per cent while its twin index; the MSCI FM Index which tracks frontier markets closed flat
The momentum of activities at the market increased during the week with total turnover of 1.225 billion shares worth N15.243 billion in 15,317 deals as against a total of 839.978 million shares valued at N12.418 billion traded in 16,183 deals two weeks ago.
The financial services industry led the activity chart with 514.067 million shares valued at N5.104 billion traded in 6,489 deals; thus contributing 41.97 per cent and 33.48 per cent to the total equity turnover volume and value respectively. The construction/real estate industry followed with 463.348 million shares worth N1.620 billion in 210 deals. The third place was the conglomerates industry, with a turnover of 69.017 million shares worth N86.431 million in 528 deals.
The top-three traded equities were UPDC Real Estate Investment Trust, FBN Holdings Plc and Transnational Corporation Plc, which accounted for 765.230 million shares worth N4.282 billion in 847 deals, contributing 62.47 per cent and 28.09 per cent to the total equity turnover volume and value respectively
Most analysts were optimistic on the outlook for the market.
“We expect the bulls to retain their dominance as buying activities due to positioning for 2022 full-year dividends will likely suppress selling activities,” Cordros Securities stated.
Analysts, however, advised investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.
Analysts at Afrinvest Securities said they anticipated “a mixed performance as investors take profit while seeking bargain hunting opportunities”.