The rebalancing in the oil market, which has resulted in a 94 per cent rebound in crude prices, added to enhanced institutional investors’ patronage in the Nigerian bourse buoyed equities transactions last week, as the All-Share Index (ASI), and market capitalisation soared massively by 5.59 per cent to close the week at 25,204.75 and N13.136trillion.
Similarly, all other indices finished higher with the exception of NSE ASeM, which closed flat. Analysts argued that the bullish rally also followed investors positioning ahead of markdown dates of blue chip stocks, with many companies yet to release their 2019 full year, and Q1 2020 financials expected to do so.
According to them, since the grace period due to the coronavirus pandemic expires on May 31, more numbers are likely to hit the market in this period, especially the 2019 audited accounts.
For instance, the Chief Research Officer, Investdata Consulting Limited, Ambrose Omoduon, affirmed that the seeming bull-run of crude oil prices at the international market has supported the positive sentiment driving the market.
He pointed out that the money flow index also revealed improved institutional investors activities, adding that the rising new cases of the coronavirus and its negative impact on the economy, remains a grave concern.
“The market’s high dividend yield continues to attract buying interests, while more audited and unaudited corporate earnings will hit the market, going forward, despite the likely continuation of selloffs.
“In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria, and weak economic conditions. Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.”
United Capital Plc analyst, in its report, titled: “What is driving the rally in the equities market,” said: “The question on the mind of investors includes whether the uptrend is sustainable and what exactly is driving this recovery. In our opinion, the recovery in share prices is driven by rebalancing in the oil market, which has resulted in a 94 per cent rebound in oil prices from $18 per barrel to about $35 per barrel within a month.
“This is an increasing indication that governments around the world will reopen their economies regardless of the anxiety around COVID-19; cheap market valuation of high quality stocks; sustained dividend declaration by corporates, translating into attractive dividend yield amid poor rates on T-bills and sizable market liquidity.”
Also, analysts at Codros Capital Limited, said: “In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.”
A breakdown of trading activities last week showed that gains recorded by most blue-chip stocks, lifted investors’’ wealth by N36billion at the reopening of the market on Monday.
Specifically, the ASI rose by 70.42 points or 0.29 per cent to 23,941.75 points. Accordingly, investors gained N36billion in value as market capitalisation went up to N12.477trillion.
The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Okomu Oil, MTN Nigeria Communications, Unilever Nigeria, Lafarge Africa and GlaxoSmithKline Consumer Nigeria.
Transactions on the equities sector of the Nigerian Stock Exchange (NSE) continued in an upbeat on Tuesday, as more high value stocks constituted the gainers’ chart, resulting to a further rise in market capitalisation by N136billion.
Specifically, at the close of transaction, the ASI rose by 261.12 points or 1.09 per cent to 24,202.87 points. Accordingly, investors gained N136billion in value, as market capitalisation rose to N12.613trillion.
The improved performance was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Okomu Oil, Dangote Cement, Presco, Unilever Nigeria, and Guaranty Trust Bank.
On Wednesday, gains recorded by most blue chip stocks pushed the ASI further by rise further by 1.03 per cent, and increased by 249.36 absolute points to close at 24,452.23 points.
Similarly, the market capitalisation edged N130billion to close at N12.743trillion. The uptrend was impacted by gains recorded in large and medium capitalised stocks, amongst which were; Dangote Cement, Zenith Bank, BUA Cement, Guaranty Trust Bank, and Stanbic IBTC Holdings.
Further analysis of last week’s trading showed a turnover of 1.718 billion shares worth N18.849billion in 26,367 deals by investors on the floor of the Exchange.
This volume of transactions recorded was however higher than a total of 926.418 million units worth N9.768billion that changed hands in 20,910 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 1.273 billion shares valued at N11.362billion traded in 13,808 deals; thus contributing 74.08 per cent to the total equity turnover volume.
The industrial goods industry followed with 102.377 million shares worth N3.194billion in 2,956 deals. The third place was the Healthcare industry, with a turnover of 99.620 million shares worth N493.348million in 1,194 deals.
Trading in top three equities namely Zenith Bank Plc, Access Bank, and FBN Holdings Plc. (measured by volume) accounted for 673.104 million shares worth N6.803billion in 5,927 deals, contributing 39.18 per cent to the total equity turnover volume.