Nigerian Equities Hit Seven-Month High With N471b Gain

Nigerian equities leapt on the back of the bulls to their highest gain in more than seven months yesterday, rallying net capital gains of N471 billion in five hours.

Benchmark indices at the  stock market indicated an average gain of 3.54 per cent, the highest gain since May 28, last year.

The All Share Index (ASI)- the value-based index that tracks share prices at the Nigerian Stock Exchange (NSE), crossed the 28,000 mark to close at 28,562.48 points as against its opening index of 27,586.93 points.

Aggregate market value of quoted companies rose from N13.316 trillion to close at N13.787 trillion.

The sustained rally so far this year pushed the average year-to-date return to 6.41 per cent. Equities have been on the upswing for the past five trading sessions.

The momentum of activities also increased significantly as turnover rose by 66.2 per cent to 741.82 million shares valued at N9.22 billion in 7,622 deals.

With more than three advancers for every decliner, all sectoral indices also trended upward with the NSE Industrial Goods Index leading with a return of 6.07 per cent.

The NSE Banking Index rose by 3.87 per cent. The NSE Insurance Index appreciated by 2.72 per cent. The NSE Consumer Goods Index rallied by 0.36 per cent while the NSE Oil and Gas Index inched up by 0.17 per cent.

“Following the recent trend in the market, we maintain our bullish outlook on the market this week,” Afrinvest Securities stated.

There were 37 gainers against 11 losers. Nigeria’s largest capitalised company, Dangote Cement led the rally with a gain of N14 to close at N164. Presco followed with a gain of N3.85 to close at N52. Okomu Oil Palm rose by N3.50 to close at N60. Stanbic IBTC Holdings appreciated by N2.50 to close at N42.50. Julius Berger Nigeria added N1.95 to close at N21.85 while MTN Nigeria Communications chalked up N1.90 to close at N109.50 per share.

On the negative side, Total Nigeria led the losers with a drop of N3.90 to close at N107. Unilever Nigeria followed with a loss of 40 kobo to close at N19.60. UAC of Nigeria declined by 20 kobo to close at N9.05 while UACN Property Development Company slipped by 8.0 kobo to close at N1 per share.

Banking stocks dominated the activities chart with United Bank for Africa (UBA) the most active stock with 156.01 million shares worth N1.40 billion. Zenith Bank followed with 86.06 million shares worth N1.89 billion. Access Bank placed third with 82.44 million shares worth N963.67 million while FBN Holdings recorded a turnover of 69.4 million shares worth N524.56 million.

 

United Capital Plc has projected that Nigerian equities may deliver a modest average return of some 5.3 per cent in 2020, although the overall market outlook remains susceptible to external shocks and domestic policies.

Investors in Nigerian equities lost about N1.71 trillion in 2019 as the market closed 2019 with negative average full-year return of -14.60 per cent. It had recorded negative average full-year return of -17.81 per cent in 2018.

In its 2020 economic outlook report titled “A Different Playing Field”, United Capital stated that its base case scenario sees equities market returning +5.3 per cent in 2020, driven by local demand for high-quality dividend-paying stocks and increased system liquidity.

The report carefully considered events in the international economic environment, including the effects of the United States-China trade wars on the global economy, as well as piecing together the stance of the world’s biggest central banks from their decisions over the course of 2019.

The report takes these parameters into consideration, combined with local happenings on the political and economic policy scene, to project the nature and movement of the economy and the financial market in 2020.

According to the report, the continued auction of high yield Open Market Operation (OMO) bills to foreign portfolio investors (FPIs) may keep foreign interest in local equity market tepid amid fears of a naira devaluation and confidence deficit in the economy.

The report noted that FPIs are likely to continue their flight to safety by swapping or selling equities for low-risk OMO bills pointing out that the outlook for stocks in 2020 was anchored on developments in the domestic and global economy with monetary policy as the biggest factor to watch.

“From all indications, the only justification for an uptick in the equities market is the lower yield environment, supported by increased local currency liquidity. However, this will not be enough to trigger a major rally in the absence of the demand from FPIs,” United Capital stated.