Nigerian stocks climbed to an eight-week high yesterday lifted by gains in shares of energy companies after global oil prices rallied.
Recovering after two days of losses, the main share index (Nigerian Stock Exchange) All-Share Index rose 1.04 per cent to 24,141.48, while market capitalisation gained N134.5 billion.
Brent crude was up 68 cents, or 1.5 per cent, at $45.18 per barrel yesterday, after falling around one per cent on Tuesday.
Oil’s rally followed an industry report showing United States crude inventories last week fell more than analysts had expected, bolstering expectations that fuel demand in the world’s biggest economy can weather the COVID-19 pandemic.
Seplat Petroleum Development Company Plc, which is also listed in London, rose by 10 per cent, – the maximum allowed on the Lagos bourse.
Equally, Oando Plc and Total Nigeria Plc rose 1.2 and 1.1 per cent respectively.
As a result, the index of Nigeria’s top five oil and gas companies, the NSE Oil & Gas Index, climbed 5.24 per cent, the highest appreciation by sectoral indices.
The NSE Insurance and NSE Consumer Goods indices trailed, gaining 0.6 per cent and 0.2 per cent, respectively.
Month-to-date, the Nigerian stock market has appreciated by 1.8 per cent, compared to 0.8 per cent gain recorded in the month of July.
Market operators had said one of the factors that would determine the market direction for the second half (H2) of the year would be the corporate results for six months to June 30, 2020.
They had advised discerning investors to take advantage of the current low prices and increase their investments in the market.
For instance, a stockbroker, Mr. Ayo Oguntayo, said: “Just like the scenario that occurred after the decline in Q1 when investors swooped on shares due to their low prices, the decline in June has provided an opportunity for discerning investors to come in ahead of the release of H1 financial performance of companies. “Although there are some apprehensions that the COVID-19 pandemic may have an impact on the results, there are possibilities of some companies still coming up with positive results because many of them activated their business continuity plan that helped to mitigate the negative impact of the lockdown.”
Similarly, the Chief Executive Officer of Wyoming Capital and Partners, Mr. Tajudeen Olayinka, said stakeholders now had a better understanding of the pandemic and the fact that everyone would have to live with it.
He added that it is unlikely that the market will go through a repeat of the experience it had at the onset of the pandemic.
“However, the market needs to analyse H1 results that are being awaited, to determine the impact of the pandemic on listed companies before taking further investment decisions or charting a way forward.
More importantly, how the various measures put in place by the government would impact the economy as a whole. On a balance of probability, we may see a better market in H2 2020,” Olayinka said.