- Investors Recover N672b Amid Bargain-hunting
Investors in Nigerian equities rode on the back of renewed bargain-hunting to recover N672 billion in net capital gains by the weekend after losing some N908 billion the previous week.
Benchmark indices for Nigerian equities showed a major rally with average net capital gain of 5.03 per cent during the five-day trading session, equivalent to net capital gain of N672 billion. The sustained rally reversed the negative average year-to-date return of -3.73 per cent or a net loss of N273 billion recorded two weeks ago. Average year-to-date return turned positive at 1.11 per cent at the weekend.
GTI Capital Chief Operating Officer, Mr Kehinde Hassan, said the recovery was driven by bargain-hunting by institutional investors, who sought to take advantage of the recent decline in share prices.
He said the trading momentum, despite the profit-taking dip in the last trading session at the weekend, suggested that the price recovery will continue this week.
Analysts at Cordros Capital stated that “relatively lower prices of value stocks, coupled with still-positive macro-economic fundamentals, will further sustain gains in the equities market”.
Aggregate market value of all quoted equities at the Nigerian Stock Exchange (NSE) rose from the week’s opening value of N13.336 trillion to close weekend at N14.008 trillion. The All Share Index (ASI)-the main index that tracks share prices at the Exchange, rallied from the week’s opening index of 36,816.29 points to close at 38,669.23 points.
Total turnover at the equities market stood at 1.75 billion shares worth N31.18 billion in 24,604 deals last week compared with a total of 2.70 billion shares valued at N84.78 billion traded in 19,715 deals two weeks ago.
A breakdown of the trading pattern showed that the financial services sector accounted for 1.42 billion shares valued at N19.72 billion in 13,950 deals; representing 81.4 per cent and 63.2 per cent of the total equity turnover volume and value respectively. The consumer goods sector followed with 153.105 million shares worth N6.805 billion in 4,512 deals while conglomerates sector placed third with a turnover of 60.47 million shares worth N186.60 billion in 905 deals.
Banking stocks dominated the activities chart with the trio of Guaranty Trust Bank Plc, Access Bank Plc and Zenith Bank International Plc leading the chart with a turnover of 588.61 million shares worth N16.57 billion in 4,120 deals, representing 33.65 per cent and 53.14 per cent of the total equity turnover volume and value respectively.
Further analysis indicated that industrial and consumer goods stocks were the major drivers of the rally last week. The NSE Industrial Goods Index recorded average week-on-week gain of 9.36 per cent, appreciating by 6.55 per cent. The NSE Banking Index posted a gain of 4.48 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks, rallied by 5.25 per cent. However, the NSE Oil and Gas Index declined by 1.34 per cent while the NSE Insurance Index dropped by 0.61 per cent.
The market had witnessed its worst decline with a net loss of N908 billion two weeks ago. The week-on-week average decline of 6.38 per cent eroded positive return and left the market with average negative return of -3.73 per cent penultimate weekend.
The profit-taking fluctuations, which had started in March, worsened considerably into a swinging sell-off last month. Nigerian equities lost N1.15 trillion in May 2018, equivalent to average month-on-month decline of 7.67 per cent. Nigerian equities had lost N557 billion in March and showed restraint with a modest loss of N44 billion in April.
Nigerian equities had last January hit all-time high market capitalisation of N15.3 trillion while the ASI had risen to 43,041.54 points, its highest index points since October 2008. The ASI had opened 2018 at 38,243.19 points while total market value of quoted equities opened the year at N13.609 trillion.
Nigerian equities had closed 2017 with full-year average return of 42.30 per cent, ranking within the top 10 best-performing equities across the world. Aggregate market value of quoted equities closed 2017 with net capital appreciation of N4.36 trillion.
Most analysts expected Nigerian equities to record double-digit gain this year, despite the political risks of political transition.
FSDH stated that Nigerian equities have potential to generate average return of 27.43 per cent in 2018, building on the average gain of 42.3 per cent recorded in 2017.
FBNQuest Capital Limited, the investment banking subsidiary of FBN Holdings Plc, predicted that the Nigerian equities market would sustain a bullish run for the second consecutive year with a double digit return of 25 per cent in 2018.