Next Two Months, NSE Equities Investors Could Gain ₦2 trillion

Next Two Months, NSE Equities Investors Could Gain ₦2 trillion

With the ongoing equities rally,  the Nigerian Stock Exchange (NSE) market capitalisation is more likely to cross ₦18 trillion mark in 2020.

What that means is that it is not impossible for shares pickers to gain ₦2 trillion in just two months to year end.

Forget it, the equity market has shown some kind of divergence from being a thermometer for gauging the Nigerian economic temperature.Next Two Months, NSE Equities Investors Could Gain ₦2 trillion

More than ever, it is driven by sentiments, earnings quality and dearth of alternative investment windows has become a visible hands in demand and supply equation.

The recent rally may be stronger and long lasting than expected as a result of development in the Nigeria’s policy directions, for instance.

Already, the Nigerian stock exchange has recorded 13.7% year to date return as against its negative position in the early period.

Nigerian must find themselves in the stock market equation as a new defining moment is here and it is going to last longer than anyone thinks.

How do I know that? The Godwin Emefiele’s led Central Bank of Nigeria would support President Muhammadu Buhari’s economic stance.

President doesn’t need to talk, Emefiele is already reading his body language and understand very well his mantra.

Lower yields on fixed income securities is a key driver plus better than expected earnings performance in some sectors.

On Friday, equities market capitalisation printed at ₦16 trillion. This is the same market where total equities value had printed slightly below ₦13 trillion in 2020.

What is really driving the rally?

Many things, according to people familiar with the stock market chemistry.

First, liquidity is finding where it will settle for some gains and fixed income market is not part of that equation as yields plunged to all time low.

It however unlikely for rates to go negative as the market is actually pointing into that direction.

However, domestic participation is on a stronger level even with whatever investing behaviour foreign investors are exhibiting.

More likely, chunk of pension assets may find its way into dividend paying equities classes with stable capital appreciation.

Sentiment is reaching the sky for share pickers and this resurgence has not been around in a long while – thanks to primary market auction ban by the apex bank.

Confidence level rise as corporates disappointed largely bearish analysts’ estimates in the first half when covid-19 held sway.

Especially, with banking sectors earnings coming stronger, perhaps for the fact that the CBN gave forbearance to restructure loan.

The situation that helped bank from recording terrible loan movement from one stage to another actually water-down bloodbath at the Broadstreet.

The fast moving consumers sector has been benefiting from land border closure, thereby operators were able to raise prices which led to improved earnings.

This left a dent in the fixed income market as CBN maintains dovish stance amidst rising inflationary trend.

Then, the market suffers negative return persistently amidst dearth of alternative investment windows.

Then comes the third quarter earnings season which has largely been supportive of the ongoing rally in the equities market.

On Friday, the domestic equities market sustained its bullish momentum on the back of positive sentiment surrounding Q3 earnings results.

The market gained on all trading days and performance was driven by buying interest in NESTLE (+21.0%), BUACEMENT (+11.2%) and DANGCEM (+6.0%).

As a result, the NSE All-Share Index posted a gain of 6.4% week on week, crossing the psychological benchmark of 30,000 points to settle at 30,530.69 points.

Similarly, year to date return improved to 13.7% and market capitalisation rose ₦958.4 billion week on week to close at ₦16.0 trillion.

On Friday, activity level strengthened as average volume and value rose 58.5% and 50.1% to 477.4 million units and ₦5.9 billion respectively.

The top traded stocks by volume were FBNH (208.0m units), ZENITH (188.5m units) and ACCESS (180.0m units) while GUARANTY (₦4.2bn), ZENITH (₦4.1bn) and STANBIC (₦1.9bn) led by value.

The top performing stocks for the week were PORTLAND (+32.2%), FCMB (+28.3%) and TRIPPLEG (+27.8%) while PRESTIGE (-10.0%), MORISON (-10.0%) and CUTIX (-8.9%) were the laggards.

Read Also: NSE to Remain Positive amid Tier-1 Banks Earnings Releases

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Next Two Months, NSE Equities Investors Could Gain ₦2 trillion