Despite global challenges, stocks gain N6.3 trillion

Ken Ibenne

Ken Ibenne

Despite the global stocks market crash that has erased almost $11 trillion since the end of March, Nigeria’s equities market has gained over N6.3 trillion or 24.31 percent in less than five months this year.

 

Following fresh listings, an increase in oil prices, better-than-expected full-year earnings and dividend payments, and a good first-quarter scorecard, the local market has been on a tear. Investors who are seeing hopeful indicators of Nigeria’s economic recovery continue to be impressed by the market.

The Nigerian Exchange Limited (NGX) All-Share Index and market capitalisation have increased from year-open lows of 42, 716.44 points and N22.30 trillion to 53,098.46 points and N28.625 trillion as of May 13.

In January, the market increased 9.15 percent, and in February, it rose 1.65 percent, but in March, it dipped 0.91 percent. It shifted north by 5.09 percent in April, and as of Friday, the market has gained 6.97 percent month to far, with tremendous upside potential.

The year began with the historic offering of BUA Foods’ 18 billion shares at N40 per share, bringing the NGX market capitalization to N720 billion. Abbey Mortgage Bank listed its N3.028 billion right issue, while Access Holdings Plc listed fresh shares of 35.545 billion units valued at N353.675 billion following its restructuring.

“The NGX All Share Index has surpassed 50,000 for the first time since 2008, marking a 13-year high.” “The IPO of BUA Foods, the surge in oil prices reflected in Seplat, and investors taking positions in fungible stocks (Airtel Africa and Seplat)” noted Lagos-based analysts at Coronation Research in a May 9 note.

They also pointed out that the Nigerian stock market is cut off from global markets.

“We expect the impact of market interest rate rises to be delayed,” the analysts said heading into the second quarter. This might give the market some breathing room, especially for stocks that continue to improve their top lines, margins, and earnings.”

The NGX Oil & Gas Index, which provides an investable benchmark that tracks the performance of the oil and gas sector, is up 60.75 percent this year. This index includes the most well-capitalized and liquid oil and gas marketing businesses. The NGX Consumer Goods Index came in second (18.54 percent YTD).

The NGX Consumer Goods Index is a tradable benchmark that measures the performance of consumer goods companies. This index includes the largest and most liquid food, beverage, and tobacco firms.

With a gain of 14.94 percent, the NGX Industrial Index ranks third among the gainers. This index serves as an investable benchmark for the industrial sector’s performance. It consists of the industrial sector’s most well-capitalized and liquid enterprises.

The outperformers on the Nigerian stock exchange are listed below.

As of May 13, market data shows that some Nigerian stocks have outperformed the market. Meyer Plc has climbed 552.2 percent to N3, followed by Wema Bank Plc (406.9% YTD to N3.65); Presco Plc (N200 or 127.8% YTD); Guinness Nigeria Plc (N98, up 151.3 percent YTD); Academy Press (N1.51 or 202 percent); and Learn Africa (N1.51 or 202 percent) (N2.50 or 113.7 percent).

PZ Cussons (N11.60, or 90.2 percent), Seplat (N1,300, or 100 percent), SCOA (N1.94, or 86.5 percent), NACHO (N6.79, or 81.6 percent), ETI (N12.50, or 43.7 percent), Fidelity Bank (N3.70, or 45.1 percent), Jaiz Bank (90kobo, or 60.7 percent), Cadbury (N15.90, or 80.7 percent), Champion Breweries (N (N9.95 or 24.4 percent)

Conoil’s stock price has increased by 43.2 percent to N31.50 this year, while Eterna’s stock price has increased by 43.6 percent to N7.25 a share. Oando (N6.01 or 36%), UACN (N14.20 or 49%), Cornerstone (59kobo or 28.3%), Royal Exchange (N1.53 or 73.9%), United Capital (N13.50 or 36.4%), Julius Berger (N29.80 or 33.3%), Fidson Healthcare (N12.05 or 93.7%), Courteville (54kobo or 42.1%), Airtel Africa (N1,400 or 46.6%), and (N261.60 or 32.8 percent).

“Given the sustained buy-side activity seen throughout the week ended Friday May 13, coupled with the possibility of the CBN raising rates at next week’s MPC meeting, we anticipate a quiet start to the week, as investors remain on the sidelines in anticipation of the Monetary Policy decision before committing further to equities,” Vetiva analysts said in their market outlook for the new week.

Since then, the NGX has pledged to accelerate the digitisation of its processes and operations in order to attract more investors, particularly millennials and youths, who are increasingly looking for new investment opportunities.

Temi Popoola, NGX’s CEO, has identified five primary emphasis areas for 2022 as part of the company’s attempts to broaden access and attract a new generation of investors.

He stated that the Exchange would focus on five major areas in 2022 to drive growth, including digital transformation, listings and delistings, technology, partnerships, and sustainability.

“NGX would attempt to consolidate its historic reputation with a new vigour of digitization by developing innovative and automated market access while ensuring overall quality of listed firms and convenience of capital raising.” He said the Exchange would use strategic initiatives to entice financial technology firms to the stock market, including the development of a Nasdaq-style platform for tech company listings.

“Today, there is a lot of money raising from technology companies all around the world.” Our market may be able to help you raise this money. The SEC has already assumed command. It will assist in driving economic growth and mobilizing capital from surplus to deficit sectors,” he added.

Investors should diversify their portfolios to secure a higher return on investment, according to the NGX earlier this year.

The bourse listed fresh issuances at N1.701 trillion and Eurobonds worth $4 billion on its platform in the first quarter of 2022. These issuances, which are listed on both the stocks and bond markets, are critical for broadening the market, boosting liquidity and tradability, and increasing capital access to support growth projects.

“If an investor chooses the same asset, he or she can diversify by investing in different areas and businesses,” Jude Chiemeka, divisional head, capital markets at NGX, said at a recent workshop for retail investors. There are numerous businesses and sectors to investigate, including medicines, information technology, consumer products, conglomerates, financial services, and agriculture, among others.

“Consider what would happen if you put all of your money into a single security.” Everything will be OK as long as the stock continues to do well. However, if the market makes a sharp shift, the chances of severe investment losses are raised.”

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