Lower prices stimulate equities

Investors have staged a major comeback to Nigerian equities after recent price depreciation enhanced fair value and potential returns for several stocks.

All major benchmark indices at the stock market closed weekend positive with widespread positive sentiment across most sectors of the market.

Average return for the Nigerian equities at the weekend stood at 0.46 per cent, equivalent to net capital gains of N119 billion within the four trading sessions of the week.

The Nigerian market outperformed global indices for emerging and frontier markets and ranked within the positive group in a week characterised by mixed performance across the global markets.

With more advancers than decliners, the average year-to-date return rode on the back of the rally to 11.36 per cent, sustaining expectation that the Nigerian market may be on course to its third positive consecutive annual return.

The All Share Index- the value-based common index that tracks all share prices at the Nigerian Exchange (NGX) closed weekend at 47,569.04 points as against the week’s opening index of 47,351.43 points. Aggregate market value of all quoted equities also trended upward simultaneously from the week’s opening value of N25.791 trillion to close weekend at N25.910 trillion.

The concurrence of the ASI and market capitalisation implies that the increase in market value was driven mainly by share price appreciation, rather than primary market activities such as listing of new shares or revaluation and splitting of existing shares.

Most sectoral indices also closed positive, underlining the widespread bargain-hunting that drove share pricing during the week. The NGX 30 Index- which tracks the 30 largest stocks at the Exchange, recorded above average growth of 0.65 per cent. The NGX Industrial Goods Index recorded the highest gain of 3.17 per cent. The influential NGX Banking Index rose by 1.93 per cent. The NGX Insurance Index- which tracks the most populous sector at the market, posted average return of 1.72 per cent for the week. However, the NGX Oil and Gas Index depreciated by 2.13 per cent while the NGX Consumer Goods Index dropped by 0.74 per cent.

Meanwhile, the NGX Pension Index- which tracks portfolios that meet the investment guidelines for pension funds, rose by 0.38 per cent while the NGX Lotus Islamic Index- which tracks stocks that comply with Islamic investment rules, recorded above-average return of 0.90 per cent.

<<The Nation>>