Nigerian stocks beat global slowdown with N154b gain

Investors gain N10bn as market rebounds

Nigerian stocks continued on the upswing as increased bargain-hunting sustained an all-week bullish trading that saw the stock market closing with average return of 1.17 per cent at the weekend, the second highest gain among global advanced and emerging markets. Kenya recorded average return of 3.4 per cent.

Trading reports at the Nigerian Stock Exchange (NSE) weekend showed market-wide buying sentiments across major sectors as investors continued to react positively to mostly steady corporate earnings in the first half of 2020. The benchmark index for Nigerian equities, the All Share Index (ASI), closed weekend with average return of 1.17 per cent, equivalent to net capital gain of N154 billion.

Nigerian, Kenyan and Japanese stocks were the major contrarian stocks in a week dominated by bearish sentiments across major global advanced and emerging markets. In United States of America, the S & P 500 dropped by 4.1 per cent while NASDAQ Index declined by 5.9 per cent. In United Kingdom, the FTSE ASI dropped by 2.7 per cent. Germany’s XETRA DAX Index dipped by 1.6 per cent. France’s CAC 40 Index slipped by 1.0 per cent. Hong Kong’s Hang Seng Index dropped by 2.9 per cent. Russia’s RTS Index declined by 3.8 per cent. China’s Shanghai Composite Index depreciated by 1.4 per cent.

In Africa, South Africa’s FTSE/JSE ASI dropped by 4.1 per cent. Egypt’s EGX 30 Index declined by 2.5 per cent while Ghana’s GSE Composite Index slipped by 0.4 per cent. On the positive side, Kenya’s NSE 20 Index appreciated by 3.4 per cent while Japan’s Nikkei 225 Index gained 1.4 per cent.

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Aggregate market value of all quoted equities at the NSE rose from the week’s opening value of N13.204 trillion to close weekend at N13.358 trillion. The ASI also trended upward successively from its opening index of 25,309.37 points to close weekend at 25,605.64 points.

The momentum of activities doubled with a total turnover of 2.21 billion shares worth N10.96 billion in 18,013 deals last week as against a total of 1.07 billion shares valued at N7.38 billion traded in 16,684 deals two weeks ago.

The construction and real estate sector was the most active sector with a turnover of 954.53 million shares valued at N681.39 million in 218 deals; representing 43.21 per cent and 6.22 per cent of the total equity turnover volume and value. The financial services sector followed with 889.89million shares worth N6.54 billion in 10,107 deals while the conglomerates sector placed third with a turnover of 209.44 million shares worth N579.99 million in 677 deals.

The three most active stocks were UACN Property Development Company, Zenith Bank and LASACO Assurance. The three most active stocks accounted for 1.23 billion shares worth N3.24 billion in 2,148 deals, representing 55.61 per cent and 29.60 per cent of the total equity turnover volume and value.

Also, a total of 126,119 units of Exchange Traded Products valued at N655.919 million were traded this week in 36 deals, compared with a total of 107,424 units valued at N520.31 million traded in 18 deals penultimate week.

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In the bond market, a total of 1,016 units valued at N1.1 million were traded in eight deals compared with a total of 8,285 units valued at N10.66 million traded in 15 deals two weeks ago.

The NSE All-Share Index and Market Capitalisation appreciated by 1.17 per cent to close the week at 25,605.64 and N13.358 trillion.

With 41 advancers against 19 decliners, all sectoral indices closed positive. The NSE 30 Index, which tracks the 30 largest stocks, posted a gain of 1.31 per cent last week. The NSE Banking Index rose by 2.76 per cent. The NSE Insurance Index appreciated by 1.96 per cent. The NSE Consumer Goods Index rose by 1.49 per cent. The NSE Oil and Gas Index led the rally with average return of 3.65 per cent while the NSE Industrial Goods Index posted a modest gain of 0.44 per cent.

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Royal Exchange led the advancers with a gain of 26.9 per cent to close at 33 kobo. Cornerstone Insurance followed with a gain of 17.86 per cent to close at 66 kobo while Union Diagnostics rose by 12.5 per cent to close at 27 kobo. On the negative side, The Initiates led the decliners with a drop of 18.57 per cent to close at 57 kobo. Lasaco Assurance dropped by 16.13 per cent to close at 26 kobo while Tripple Gee & Company declined by 12 per cent to close at 44 kobo per share.

Analysts at Afrinvest Securities attributed the sustained rally to positive developments in the Nigerian foreign exchange market, better-than-expected corporates earnings and improved economic activities.

“While we expect the soft gains in the domestic market to be sustained, we note that investors are likely to pocket gains in the week ahead. Also, the resumption of foreign exchange sales could provide foreign investors the long-waited opportunity to sell their stakes and limit exposure. Thus, we anticipate a mixed performance in the coming week,” Afrinvest Securities traded.

Analysts at Cordros Securities remained cautious citing combined risks of increasing number of COVID-19 cases in Nigeria and weak economic conditions. “Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks,” Cordros Securities stated.

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