Nigerian Exchange Limited
$20 Billion Diaspora Remittance Can Boost Liquidity on The Capital Market
If investment-friendly mechanisms and safety policies are put in place on the Nigeria Exchange Limited, it could attract diaspora remittance
Although Nigeria’s capital market is one of the most traded capital markets in Africa, it has however witnessed increased volatility and inadequate liquidity which has triggered a persistent downturn in the stock market.
This challenge of inadequate liquidity has impacted negatively on market performance and explained why some prospect-loaded companies like Flutterwave partly shun the Nigeria Exchange Limited.
Investors King had earlier reported that Flutterwave is set to go public on Nasdaq through Initial Public Offering (IPO).
Since the global financial crisis of 2008, there has been an underperformance of some listed stocks on the Nigeria Exchange Limited (NGX). Much of the problem has been attributed to illiquidity and low investors’ confidence.
The development has continued to fuel persistent fall in share prices of listed firms, with several blue-chip stocks recording a 10-year low.
A seven-year review of the banking stocks shows that the shares of Unity Bank Plc, which stood at N2.29 kobo as of 2015, dropped to 43 kobo as at the close of a transaction on Friday, shedding more than 80 per cent in value.
Similarly, Union Bank Plc also shed 35.5 per cent in the same period to close at N5.60 kobo.
In the consumer goods subsector, PZ Cussons Plc lost 60.72 per cent during the period, dropping from N29.18 kobo to N8.20 kobo while Honeywell depreciated to N2.53 kobo from N3.72 kobo.
Nonetheless, it should be noted that some companies have performed amazingly well on the NGX in the last seven years. For example, the FUGAZ ( First bank, GTB, UBA, Access, and Zenith Bank,) have all witnessed increased growth. For instance, Zenith Bank shares price which was trading at N14.76 in December 2017 is now trading at N21.50.
Regardless, experts have suggested that the regulators should restrategise and reposition the capital market to leverage the remittance windfall to boost the economy.
Nigeria topped sub-Saharan Africa (SSA) in remittances with $20 billion in 2021. This performance was a remarkable improvement from the $17.21 billion recorded in 2020. If investment-friendly mechanisms and safety policies are put in place on the Nigeria Exchange Limited, it could attract diaspora remittance.
According to Paul Uzom, Head of Equity Trading at Planet Capital, “if dollar-denominated equities or fixed income is introduced in the market, it would attract the diaspora funds into the capital market. Most diaspora investors are only interested in Eurobonds because of a lack of confidence in the local currency”.
Naira has been on a consistent fall in the last few years. In 2015, the Nigerian Naira was trading at an average of N197 to $1. It is, however, trading at an average of N425 today.
Nigerian Exchange Limited
Nigerian Stock Market Dips as Uncertainty Surrounding Nigerian Economy Deepens Amid Cash Crunch
The Nigerian stock exchange extended its decline by another N13 billion last week as a cash crunch amid high-interest rates dragged on economic activity.
The Central Bank of Nigeria (CBN) led monetary policy committee raised interest rates by 50 basis points to 18% despite Nigeria’s cash crisis, high unemployment rate and weak economic activity. The committee hinged its decision on the rising inflation rate and the need to lure foreign investors into the economy given that developed economies were doing the same.
During the week, stock investors exchanged 1.689 billion shares worth N11.066 billion in 14,019 deals, in contrast to a total of 853.745 million shares valued at N11.841 billion that exchanged hands in 18,543 deals in the previous week.
Breaking down key sectors, the healthcare industry led the activity chart with 1.086 billion shares valued at N1.627 billion traded in 267 deals. Therefore, contributed 64.32% and 14.70% to the total equity turnover volume and value, respectively.
The financial services industry followed with 379.556 million shares worth N4.547 billion in 6,711 deals. In third place was the conglomerates industry with a turnover of 89.526 million shares worth N131.231 million in 534 deals.
Neimeth International Pharmaceuticals Plc, Transnational Corporation Plc and United Bank for Africa Plc were the three most traded equities accounting for a combined 1.248 billion shares worth N2.347 billion that exchanged hands in 1,102 deals and contributed 73.89% and 21.21% to the total equity turnover volume and value, respectively.
The market value of listed equities decreased by N13 billion from N29.916 trillion recorded in the previous week to N29.903 trillion last week.
The NGX All-Share Index 0.04% or 22.86 index points to close the week at 54,892.53 index points, down from the 54,915.39 index points it closed in the previous week.
All other indices finished higher with the exception of NGX Main Board, NGX 30, NGX Insurance, NGX MERI Growth, NGX Consumer Goods and NGX Industrial Goods which depreciated by 0.30%, 0.16%, 0.53%, 0.58%, 0.74%, and 0.49% respectively while the NGX ASeM, NGX Oil and Gas, NGX Growth and NGX Sovereign Bond indices closed flat.
Twenty-eight equities appreciated in price during the week higher than nineteen equities in the previous week. Twenty-seven equities depreciated in price lower than forty-seven in the previous week, while one hundred and two equities remained unchanged, higher than ninety-one equities recorded in the previous week.
Nigerian Exchange Limited
Nigerian Stock Exchange Extends Gain on Wednesday, Posts 0.06% Gain
The Nigerian Exchange Limited (NGX) closed in the green on Wednesday after posting a N10 billion gain on Tuesday despite the increase in interest rates to 18% and the uncertainty surrounding the cash crunch.
On Wednesday, stock investors traded 134,150,558 stocks worth N1.330 billion in 2,479 transactions during the trading hours of Wednesday. Transcorp emerged as the most traded stock with 28,122,091 shares valued at N35,922,896.78. This was followed by UBA’s 21,231,993 shares worth N170,415,095.30.
Breaking down each sector’s performance, the bank sector shed 1 basis point with Wema Bank and Zenith bank closing in the red.
Consumer goods lost 12 basis points as Honey Flour and Vitaform post -2.22% and -1.06% decline. As expected, the oil and gas sector closed flat same as the industrial sector.
The exchange year-to-date return extended to 7.19% despite 14 stocks closing in the red against 9 stocks that posted gains.
The market value of listed equities rose to N29.927 trillion, representing an N18 billion gain from the N29.909 trillion it closed on Tuesday.
NGX All-Share Index grew by 0.06% from 54,906.65 index points on Tuesday to 54,936.11 index points on Wednesday. See other details below.
Top Five Gainers
|WAPIC||N 0.41||N 0.42||0.01||2.44 %|
|GTCO||N 24.60||N 25.20||0.60||2.44 %|
|LINKASSURE||N 0.45||N 0.46||0.01||2.22 %|
|LASACO||N 0.98||N 1.00||0.02||2.04 %|
|TRANSCORP||N 1.28||N 1.30||0.02||1.56 %|
Top Five Losers
|NCR||N 2.89||N 2.61||-0.28||-9.69 %|
|FTNCOCOA||N 0.29||N 0.27||-0.02||-6.90 %|
|JAPAULGOLD||N 0.30||N 0.28||-0.02||-6.67 %|
|CUTIX||N 2.22||N 2.11||-0.11||-4.95 %|
|CHIPLC||N 0.65||N 0.62||-0.03||-4.62 %|
Top Five Trades
Nigerian Exchange Limited
Nigerian Stock Market Rebounds on Tuesday as Investors Pocketed N10 Billion
After a period of bearish trends, the Nigerian Exchange Limited (NGX) rebounded on Tuesday to post a N10 billion gain.
The market capitalisation of all the listed equities grew by 0.03% to close the day at N29.909 trillion while the NGX All-Share Index expanded by the same 0.03% to 54,906.65.
Market sentiments were even as both gainers and losers had 12 equities each on their charts at the close of the day’s trading. However, Linkage Assurance, Wapic, and Champion led the gainers’ table, gaining 9.76 per cent, 7.89 per cent, and 4.26 per cent, respectively.
On the other hand, Ikeja Hotel, Cadbury, and UPL topped the losers’ table with 9.65 per cent, 5.83 per cent, and 4.76 per cent loss, respectively, in their share values.
In terms of the most traded stocks, Zenith Bank led with 11,964,640 shares worth N298.835m exchanged in 255 deals, followed by GTCO with 10,472,370 million shares worth N258.239m traded in 252 deals. MTN Nigeria was the third most traded stock with 421,619 of its shares valued at N98.138m.
The rebound of the Nigerian Exchange Limited signifies a positive outlook for investors. As Nigeria’s economy continues to recover from the pandemic’s effects, the stock market is poised to bounce back, providing lucrative investment opportunities for local and foreign investors alike.
It is important to note that investing in the stock market comes with risks and rewards, and it is advisable to seek professional advice before making investment decisions.
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