Anticipated bailout, others lift market indices by 1.87 per cent

Expectations that the government will roll out various bailout packages to stimulate economic activities, supported by the Central Bank of Nigeria (CBN) efforts, through several intervention funds rekindled investors’ appetite for stocks, as gains in MTN, Nestle, and Tier 1 banks’ stocks buoyed trading on equities at the Nigerian Stock Exchange (NSE) last week.

Consequently, the NSE All-Share Index and market capitalisation both appreciated by 1.87 per cent to close the week at 23,021.01 and N11.997trillion, respectively.

This is despite the one day public holiday declared by the Federal Government on Friday, May 1, to commemorate the Workers’ Day celebration.All other indices finished higher with the exception of NSE Meri Growth, NSE Consumer Goods, and NSE Industrial Goods, which depreciated by 0.88 per cent, 1.42 per cent, and 0.47 per cent, respectively, while the NSE ASeM index closed flat.

The rekindled bargain-hunting among traders and investors with increased buying interest at a time prices of many equities were trading at discount irrespective of the challenging economic situation that is sliding into recession, as signalled by macro-economic indicators in the domestic and global economy.

But analysts believe the NSE’s rebound in April was beyond investors’ hunger for undervalued stocks or even the earnings expectations.For instance, Investdata Consulting Limited, said: “We believe the rebound points to a renewed interest and return of foreign investors who had sold their positions earlier, but encountered problems at the Central Bank of Nigeria’s Investors & Exporters window of the foreign exchange market.

“This was a strong market fundamental that drove stock prices during the period under review, added to the hope of a bailout package by government, as well as the complementary efforts of CBN, through its intervention funds for critical sectors and small scale businesses totalling N3.5trillion.”

It added: “These are aimed at mitigating the multiplier effects of the COVID-19 lockdown and are expected to go a long way. If the funds get to the target, it would boost local productivity, sustain jobs and create more jobs at this time.”

Analysts at Codros Capital said: “As risks remain on the horizon, following the increasing number of COVID-19 cases in Nigeria, and as economic fundamentals remain weak, we continue to advise investors to trade cautiously and seek only fundamentally-justified stocks.”

Further analysis of last week’s trading showed that a turnover of 1.012 billion shares worth N9.892billion was recorded in 17,023 deals by investors on the floor of the Exchange.

This volume of shares traded was, however, lower that a total of 1.195 billion units, valued at N13.979billion that was exchanged in 20,591 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 809.957 million shares worth N5.666billion traded in 9,533 deals; thus contributing 80.06 per cent to the total equity turnover. The industrial goods followed with 47.884 million shares valued at N1.681billion in 1,920 deals.

The third place was the conglomerates, with a turnover of 46.627 million shares worth N86.349million in 550 deals. A total of 200,104 units valued at N2.264 million were traded this week in 12 deals, compared with a total of 313,523 valued at N3.919 million transacted last week in 11 deals. About 4,195 units valued at N4.890million were traded last week in four deals compared with a total of 4,243 worth N4.471million transacted a week earlier in five deals.