After recent price depreciation improved fair value and future returns for several stocks, investors have made a significant return to Nigerian equities.
The stock market’s major benchmark indices all ended the weekend in positive territory, and most market segments were generally upbeat.
The average return for Nigerian stocks over the weekend was 0.46 percent, translating to net capital gains of N119 billion over the course of the week’s four trading sessions.
In a week marked by uneven performance on the international markets, the Nigerian market beat global indices for emerging and frontier markets and ranked among the positive group.
The average year-to-date return increased to 11.36% as a result of the rally and had more advancers than decliners, maintaining the belief that the Nigerian market may be on track to post its third straight year of positive returns.
The value-based common index known as the All Share Index, which tracks all share prices listed on the Nigerian Exchange (NGX), concluded the weekend at 47,569.04 points as opposed to the index’s initial value of 47,351.43 points for the week. The total market value of all listed securities increased concurrently from the week’s opening value of N25.791 trillion to the weekend’s closing value of N25.910 trillion.
The ASI and market capitalization agree, indicating that share price appreciation rather than primary market actions like the listing of new shares or the revaluation and splitting of existing shares, was the primary driver of the increase in market value.
The majority of sectoral indices also ended on a strong note, highlighting the widespread look for a deal that influenced share prices throughout the week. The 30 largest stocks listed on the Exchange are tracked by the NGX 30 Index, which saw above-average growth of 0.65%. The NGX Industrial Goods Index saw a gain of 3.17 percent, which was the greatest. The significant NGX Banking Index increased by 1.93 %. The most populated sector of the market, as measured by the NGX Insurance Index, had an average return of 1.72 percent for the week.
The NGX Consumer Goods Index fell by 0.74% and the NGX Oil and Gas Index declined by 2.13%.
The NGX Lotus Islamic Index, which measures equities that adhere to Islamic investment principles, posted an above-average return of 0.90%, while the NGX Pension Index, which follows portfolios that adhere to the investment standards for pension funds, increased by 0.38 percent.
Last week, there were 14,350 transactions totaling 491.815 million shares worth N11.922 billion, down from 17,183 transactions totaling 586.939 million shares worth N8.837 billion two weeks prior.
The financial services sector topped the activity chart with 346.661 million shares worth N3.757 billion exchanged in 7,427 deals, or 70.49 percent and 31.51%, respectively, of the total equity turnover volume and value. The information and communication technology (ICT) sector came in second with a turnover of 40.475 million shares worth N3.982 billion in 1,060 trades, and the conglomerates sector came in third with a turnover of 20.313 million shares worth N28.929 million in 356 deals.
The three companies with the highest level of interest from investors were Guaranty Trust Holding Company Plc, Mutual Benefits Assurance Plc, and FBN Holdings Plc. The three most active stocks accounted for 211.080 million shares worth N2.478 billion in 2,834 transactions, contributing 42.92% and 20.78%, respectively, to the total equity turnover volume and value.
Additionally, 1,192 exchange traded products (ETPs) worth N2.087 million were traded in 28 deals this week, down from 1,667 units worth N264,986 that were transacted in 19 deals two weeks ago.
A total of 4,649 bond units worth N4.768 million were swapped in 16 agreements two weeks ago, whereas today there were 13,882 bond units worth N13.879 million in 12 deals.
In contrast to the 11 gainers and 46 losers recoded the week prior, there were 25 gainers to 24 losers last week. May & Baker Nigeria was the biggest gainer in terms of percentage, rising 13.82% to close at N4.20 per share.
Ikeja Hotel came next, gaining 9.73% to close at N1.24. To close at N1.38, Neimeth International Pharmaceuticals saw a 9.52 percent increase. To close at 35 kobo, Coronation Insurance increased by 9.37 percent. The stock price of Honeywell Flour Mills increased by 8.84% to N2.34. To settle at N56.50 per share, BUA Cement increased by 8.65%. With a gain of 8%, Africa Prudential closed at N5.40. The price of Sovereign Trust Insurance increased by 7.69% to finish at 28 kobo. Access Holdings increased by 5.26 percent to conclude at N8 a share, while Guaranty Trust Holding Company increased by 5.29% to close at N17.90.
U A C of Nigeria led the decliners on the down side, losing 12.20% to settle at N9 per share. To settle at 27 kobo per share, FTN Cocoa Processors saw a 10% decline in price. To close at N2.48, Global Spectrum Energy Services saw a 9.82% drop. Academy Press lost 9.66% of its value to end the day at N1.31. After rallying following a historic listing by introduction, Geregu Power melted with a loss of 9.02 percent to close at N110 per share. R T Briscoe dropped 8.82% to finish at 31 kobo. Cutix depreciated by 8.82% to close at N2 a share, while University Press declined by 8.54% to close at N1.50.
We project a muted performance in the local bourse next week barring any positive catalyst,” Afrinvest Securities stated.
Investors may be reluctant to leave their gains in the market, according to analysts at Cordros Securities, boosting the possibility of sporadic profit-taking in the coming months.
“However, we expect this (profit-taking) to be tempered by bargain-hunting activities from early birds ahead of the third quarter 2022 earnings season. Notwithstanding, we advise investors to take positions in only fundamentally sound stocks as the fragility of the macro environment remains a significant headwind for corporate earnings,” Cordros Securities stated.