- Investors Earn N902b Gain in July Rally
Equity investors in Nigerian capital market netted N902 billion in capital gains in July 2017 as expectations on corporate earnings reports and improved macroeconomic outlook boosted the market to its highest performance in more than 31 months.
Aggregate market value of all quoted equities closed July at N12.354 trillion, representing an increase of N902 billion on N11.452 trillion recorded at the beginning of the month. The All Share Index (ASI)-the value based common index that tracks share prices at the Exchange, also indicated a month-on-month average return of 8.23 per cent to close the month at 35,844.00 points, as against its opening index of 33,117.48 points for the month.
The average year-to-date return for the seven-month period stood at 33.37 per cent. This implied that investors have so far earned N3.11 trillion in capital gains over the seven-month period. Aggregate market value of all quoted equities and the ASI had opened this year at N9.247 trillion and 26,874.62 points respectively.
The July rally further consolidated the performance of the equities market and set the second half on an upswing after equities netted more than N2.2 trillion in capital gains in the first half of the year.
The stock market recorded average year-to-date return of 23.23 per cent in the first half, equivalent to net capital gain of N2.2 trillion for the period.
Aggregate market value of all quoted equities on the NSE closed the first half at N11.452 trillion as against 2017’s opening value of N9.247 trillion, representing net capital gain of N2.205 trillion or 23.85 per cent. The ASI had crossed seven levels to close first half at 33,117.48 points compared with its year’s opening index of 26,874.62 points, representing an increase of 23.23 per cent.
The rebound represents a major recovery for hard-pressed Nigerian investors, who had lost N3.98 trillion in the past three years. The stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion. Aggregate market value of all quoted equities on the NSE closed 2016 at N9.247 trillion as against N13.226 trillion recorded at the start of trading in 2014, representing a net capital loss of N3.98 trillion.
Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, had attributed the recovery at the stock market to positive changes in the polity.
Chukwu said the market recovery was boosted by the introduction of the Investors and Exporters’ foreign exchange window and the narrowing of exchange rates between official and parallel rates due to policy stimulation by the Central Bank of Nigeria (CBN).
He noted that the improvement in foreign exchange market and overall macroeconomic performance encouraged foreign portfolio investors to reconsider and redirect funds to Nigerian equities, which supported the domestic investors’ base.
He added that the ongoing revision of the investment guidelines for pension funds administrators (PFAs), which includes mandatory investment off a certain percentage of pension funds in equities, also encouraged many PFAs to take early positions in equities ahead of the release of the final guidelines.