Bulls defy New Year downtrend, ride on CBN policy, others
•As investors wealth soar N816bn in five trading days
• Analysts predict bumper returns on investment
Smarting from the lull in trading activities recorded last year, the equities market has defied New Year trends, as transaction volumes continue to surge since the beginning of the year.
The rise in trading volumes was also accompanied by corresponding increases in market performance indices – the All-share index, and market capitalisation.
For instance, the value of listed equities gained over N816billion or 5.9 per cent year-to-date (Ytd), while cumulative value of listed equities rose to N13.787trillion as at yesterday, from N12.971trillion on January 1st.
This is contrary to expectations of some operators that activities would be dull due to low liquidity and the usual early year uncertainties.
The early-year rally on the Nigerian Stock Exchange (NSE) is being driven by higher oil prices, and the Central Bank of Nigeria (CBN) crushing rates on T-bills.
Oil prices opened much higher after Iran’s strikes on US-Iraqi bases, but now below $70/barrel.
The trend may be sustained as many companies listed on the NSE prepare to release their full year financials from next month, which can positively impact the market outlook, as more investors buy value stocks with history of dividend payments and capital appreciation.
According to analysts, this market sentiment will fuel renewed buy-side interest in the domestic bourse, and will translate to positive performance well into future trading sessions at the Exchange.
They argued that activity in the Nigerian equities market improved on the back of investors’ optimism on equities rebound due to dwindling interest rate in the money market.
Reacting, the Chief Research Officer, Investdata Consulting Limited, Ambrose Omodion, said local institutional investors and funds managers are taking advantage of the two consecutive years of decline in stock market to reposition their portfolios for the new year expectations.
He pointed out that as economic recovery continues, dividend yields of quoted companies would remain relatively higher than the prevailing money market rates and fixed income instruments.
“As circular flow of funds continue in the financial market, this rally will be sustained, as the remaining foreign investors are not exiting yet ahead of the 2019 full year earnings reporting season, and expected macroeconomic data.”
Also, analysts at Afrinvest Limited, said: “Following the recent trend in the market, we maintain our bullish outlook on the market this week.”
An independent investor, Amaechi Egbo, noted that local institutional investors and fund managers have realised that there is no hope in money market instruments presently.
“The equities market have good dividend yield. Treasury Bills for 364 days will offer about 5.2 per cent return, while stocks can generate 10 per cent yield a day, and stocks dividend yield of above 10 per cent currently are much.
“Banks have been paying dividend consistently, and all the maturing investment yield from OMO is coming back to equities, and the foreign investors remaining in the market are not ready to sell immediately. The market will still appreciate more than this,” he said.
At the close of trading, yesterday, investors wealth appreciated by whooping N471 billion, extending positive sentiment to eight successive trading sessions as investors continue to take position ahead of companies earning results.
The All-Share Index (ASI) increased by 975.55 absolute points, representing a growth of 3.54 per cent to close at 28,562.48 points.
Consequently, the YTD gains expanded to 6.41 per cent respectively, while the overall market capitalisation size gained N471billion to close at N13.787trillion.
The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which were; Dangote Cement, Presco, Okomu Oil, Stanbic IBTC Holdings, and Julius Berger.
Market breadth closed positive as 37 stocks posted gains while 11 declined. FBN Holdings, and Union Diagnostic & Clinical Services recorded the highest price gain of 10 per cent each, to close at N7.70 and 22 kobo, respectively.
Julius Berger followed with 9.80 per cent to close at N21.85 per share.
Conoil rose 9.74 per cent to close at N20.85, while Cornerstone Insurance appreciated by 9.52 per cent to close at 69 kobo, per share.
On the other hand, Tripple GEE and Co. led the losers’ chart with 9.38 per cent to close at 58 kobo per share.
UPDC Real Estate Investment Trust (UPDCREIT) followed with 8.99 per cent to close at N4.05, and Thomas Wyatt Nigeria 7.89 to close at 35 kobo, per share.
UACN Property Development Company lost 7.41 per cent to close at N1.00, while Champion Breweries shed 5.26 per cent to close at 90 kobo, per share.
The total volume traded increased by 66.18 per cent to 741.82 million shares worth N9.22 billion, traded in 7,622 deals. Transactions in the shares of United Bank for Africa (UBA) topped the activity chart with 156.01 million shares valued at N1.40 billion.
Zenith Bank followed with 86.06 million shares worth N1.89 billion, while Access Bank traded 82.44 million shares at N963.67 million.
FBN Holdings traded 69.4 million shares valued at N524.56 million, while Transnational Corporation of Nigeria (Transcorp) transacted 62.88 million shares worth N67.61 million.
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