The market capitalisation of the Nigerian Exchange Limited grew by N1.8tn in July following earnings and dividends declared by listed companies.
The positive trend of the market was further driven by insider dealings among companies, as directors and related parties consolidated their positions, thus signalling their confidence in the value proposition of the companies.
Despite the profit-taking, selloffs and foreign exchange pressures were witnessed within the period, as the benchmark NGX All-Share index which opened the trading month at 60,968.27 points, closed at 64,337.52 points, representing a 5.53 per cent growth in the month under review.
Similarly, the market capitalisation, which is the value of listed equities, rose by N1.813tn from N33.197tn to N35.011tn, representing a gain for investors.
In a statement on Monday, the NGX said, “There were also the better-than-expected corporate earnings, higher dividend payouts and relatively improved liquidity as fixed incomes yields were not stable in the face of soaring inflation which supported buying interests in the market and flow of funds into the equity space.”
Recall that a total turnover of 2.854 billion shares worth N37.645bn in 41,547 deals was traded by investors on the floor of the exchange last Friday. The high traded volume and mixed sentiment experienced during the month reflected the buying interests by majority shareholders and the activities of institutional investors, as they sought to hedge against inflation on the mixed outlook for fixed income rates and yields.
Capital market analysts believe that given the outcome of the Monetary Policy Committee meeting in the month under review, the prevailing mixed economic data, and more corporate earnings now looking up, positive earnings surprises and possible interim dividend declarations from companies would spur increased bargain-hunting activities on the bourse.
They added that profit-taking activities on stocks that have experienced substantial appreciation might be possible.
Analysts at Cordros Research in their notes said, “In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market.”
Punch