Improved corporate performance lifts investors’ gain by N835b in one week

Improved corporate performance lifted the Nigerian Exchange Limited’s (NGX) equity sector, last week, with investors gaining N835 billion.

At the close of transactions, the NGX all-share index and market capitalisation appreciated by 1.4 per cent to close the week at 99,448.91 and N60.26 trillion respectively.

Also, the volume of transactions rose significantly. A total turnover of 2.1 billion shares worth N85.9 billion was recorded in 41,217 deals traded by investors on the floor of the exchange, higher than 1.4 billion units, worth N73.9 billion that exchanged hands in 39,546 deals in the previous week.

Experts have predicted that elevated yields in the fixed-income market would continue to constrain buying activities in the equities sector of the exchange. However, the influx of impressive corporate earnings reports for the 2024 third quarter or nine months results of some listed firms spurred market activities and propelled the stellar performance recorded in the week.

These positive sentiments were primarily driven by heightened buying interest in financial and oil and gas stocks, as liquidity continued to flow steadily into the market.

The rally did not only lift the market capitalisation above N60 trillion to close at N60.26 trillion but also pushed the index’s year-to-date return to 33 per cent.

The gains were recorded in the NGX Insurance Index, which rose by 4.04 per cent, occasioned by positive sentiments in Wapic Insurance, Lasaco, and Guinea Insurance.

The NGX oil and gas index also recorded a solid 3.9 per cent gain led by Seplat after the Ministry of Petroleum granted the company clearance to acquire Mobil Producing Nigeria Unlimited (MPNU). The Industrial Index posted a mild gain of 0.1 per cent propelled by price appreciation in UPDC and Lafarge Africa.

Numbers from Chemical and Applied Product Plc (CAP), UPDC and others were outstanding, giving insights as to what investors should expect at the end of the current financial year.

For instance, CAP reported a revenue of N23.7 billion in its nine months of operation, up by 54.9 per cent, when compared to N15.26 billion achieved in the corresponding period in 2023. Its Profit after tax (PAT) also rose to N2.64 billion, up from N1.56 billion posted in 2023, representing 69.2 per cent growth.

Also, UPDC achieved 487 per cent growth in group profit after tax (PAT) to N407.2 million against loss after tax of N105.28 million in the same period of 2023.

Reacting about market performance, analysts at Cowry Research affirmed that the recent positive quarterly corporate earnings reports have further buoyed market sentiment, particularly in the banking, industrial goods, and consumer goods sectors, delivering strong performances from key players and driving the benchmark index closer to the 100,000-points psychological threshold.

Codros Capital said Month-to-Date (MTD) and year-to-date (YTD) returns improved to +0.9 per cent and +33 per cent respectively while trading activity also followed the broader market trend, with total volume and value increasing by 48.8 per cent w/w and 16.8 per cent w/w, respectively.

“We expect the direction of market performance to be shaped by the ongoing Q3 earnings season as investors cherry-pick fundamentally sound stocks.”

Chief Research Officer of Investdata Consulting Limited Ambrose Omorodion said at the current markup phase on the NGX, discerning investors and smart traders are repositioning their portfolios along sectors and companies with records of good earnings and dividend payout.

However, he noted that the economic reforms of the government, measured by the outpouring of fiscal and monetary policies are yet to put the nation’s economy on the path of recovery.

“There are issues with the implementation style amid the oscillating oil production output even as the Naira continues to depreciate at a time that oil is trading above $75 per barrel at the international market,” he said.

He urged market players to watch the current trend and trade wisely in the face of funds entering the market on buying sentiment in some sectors and profit-taking in others.

Further analysis of last week’s trading also showed that a total of 15,636 units of Exchange Traded Products (ETPs), valued at N3.6 million were recorded in 57 deals compared to a total of 6,528 units valued at N2.1 million transacted in 46 deals during the preceding week.