Finance

NGX Capitalisation gains N1.17trn in one week amid of rout across global market

NGX slams N11.7m on 4 companies over default filings

Despite the rout across the global stock market, the rally in the Nigerian Exchange Limited (NGX) remained intact as investors trading in some fundamental stocks pushed the NGX market capitalisation to a week-on-week (WoW) gain of N1.17 trillion. 

Consequently, the NGX All-Share Index rose by 4.25 per cent W/W to close at 53,098.46 basis points from 50,935.03 basis points when the market opened for trading. 

Notably, strong buying interest in MTN Nigeria that appreciated by 15 per cent, Seplat Petroleum that rose by 8.3 per cent, among other prime stocks lifted the benchmark index higher, its 5th consecutive weekly gain. 

Accordingly, the stock market in its Month-till-Date (MtD) and Year-till-Date (YtD) returns for the index increased to 7 per cent and 24.3 per cent, respectively. 

Performance across sectors was mixed, as the Oil and Gas index gained 6.9per cent, Consumer Goods Index added 5.4per cent and Industrial Goods index appreciated by 2.3per cent, while the Insurance depreciated by 1.9 per cent as the Banking index traded closed flat.

Capital market analysts had attributed the growth of the NGX to steady increase in global oil price and listed companies’ impressive earnings post-covid-19.

They explained foreign analysts’ projection of Nigeria’s economy pre-election has played a critical role in foreign investors’ massive participation in fundamental stocks listed on the bourse.

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Commenting, the doyen of the Nigerian capital market, Mr Rasheed Yusuf, said the increasing global oil price has played a critical role in the growth of the capital market in four months of 2022.

According to him, “The current global oil price that is above $100 per barrel has translated into more revenue for the federal government and more spending. Since there is more revenue for the government, there will definitely be more spending and more business opportunities for individuals and companies listed on the NGX.

“Everybody was thinking Nigeria will be in an economic crisis but with oil revenue above $100 per barrel over the Ukraine-Russia crisis, the government has been able to manage the subsidy.

“The global oil price has breathed a new life into companies in the country and investors’ expectation is that these companies will make good profit and it has contributed to growth in their stocks.

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“Most of them recently released the 2021 financial year, first quarter results and we have seen impressive corporate earnings. The performance of these companies has reflected in their corporate earnings.”

Yusuf, who is the Chief Executive Officer of Trust Yield Securities, said the Nigeria economy has surpassed analysts’ expectation, retreating on the role played by the hike in global oil price.

He said, “It is not as boom but at the same time, it is not catastrophic as projected by analysts and that is what is driving the optimism.”

Meanwhile, the NGX weekly report revealed that a total turnover of 1.816 billion shares worth N27.194 billion in 36,286 deals was traded last week on the floor of the Exchange, in contrast to a total of 1,598 billion shares valued at N19.603 billion that exchanged hands in prior week’s 21,494 deals.

The report stated that, “The Financial Services Industry (measured by volume) led the activity chart with 904.860 million shares valued at N8.498 billion traded in 12,883 deals; thus contributing 49.82per cent and 31.25per cent to the total equity turnover volume and value respectively. 

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“The Conglomerates Industry followed with 263.830 million shares worth N540.313 million in 1,651 deals.  The third place was The Consumer Goods Industry, with a turnover of 238.964 million shares worth N5.816 billion in 7,635 deals.

“Trading in the top three equities namely Transnational Corporation Plc, Guaranty Trust Holding Company Plc and Jaiz Bank Plc (measured by volume) accounted for 459,179 million shares worth N3.294 billion in 3,645 deals, contributing 25.28per cent and 12.11per cent to the total equity turnover volume and value respectively.”

Analysts at Cordros research explained in its weekly report that, “In the near term, we think the bears are likely to book profit across most counters given the five-week bullish run in the market. 

“Thus, we see more of a “choppy theme” as cautious trading takes center stage ahead of the MPC meeting scheduled later in the month. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings.”

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