Nigerian equities played the contrarian amid global stock market decline as sustained bargain-hunting ahead of the earnings season roused Nigerian shares to a net capital gain of N552 billion at the weekend.
Benchmark indices for Nigerian equities showed average return of 2.63 per cent at the weekend, indicating net capital appreciation of about N552 billion. The all-week rally pushed average year-to-date return for Nigerian equities to 2.25 per cent, building on 50.03 per cent posted as full-year return for 2020.
A review of global stock markets showed a negative trend, with Nigeria recording the second highest positive return among tracked advanced, frontier and emerging markets, trailing Egypt, which posted 4.6 per cent.
In the advanced markets, benchmark indices in United States (US) closed negative amid transition tension. The S & P 500 Index dropped by 1.5 per cent, NASDAQ Index declined by 1.7 per cent while the Dow Jones Industrial Average (DJIA) fell by 0.3 per cent. In United Kingdom, the FTSE All Share Index declined by 2.2 per cent as COVID-19 pandemic continued to force economic closure. In Europe, Germany’s XETRA DAX Index declined by 1.9 per cent while France’s CAC 40 Index dipped by 2.1 per cent. China’s Shanghai Composite Index slipped by 0.1 per cent. Brazil’s Ibovespa Index dropped by three per cent.
Meanwhile, African equities appeared to be the toasts of investors with most stocks closing on the upside. Egypt’s EGX 30 Index indicated average return of 4.6 per cent, followed by Nigeria with 2.6 per cent. South Africa’s FTSE/JSE All Share Index inched up by 0.05 per cent. Kenya’s NSE 20 Index appreciated by 1.2 per cent. Ghana’s GSE Composite Index rose by 1.0 per cent while Morocco’s Casablanca MASI Index posted average gain of 1.5 per cent.
Most Asian and Middle East markets also closed positive. Hong Kong’s Hang Seng Index appreciated by 2.5 per cent. Japan’s Nikkei 225 Index also rose by 1.4 per cent. Qatar’s DSM 20 Index rose by 2.2 per cent. UAE’s ADX General index appreciated by two per cent. Saudi Arabia’s Tadawul ASI Index rose by 1.8 per cent.
Also, Russia’s RTS Index and India’s BSE Sens Index rallied average return of 0.5 per cent each. With gains across the developing markets, the MSCI EM Index, which tracks emerging markets, closed weekend with average return of one per cent while the MSCI FM Index, which tracks frontier markets, appreciated by 0.7 per cent.
Nigeria’s benchmark index, the All Share Index (ASI) of Nigerian Stock Exchange (NSE) rose through a five-day rally from its opening index of 40,120.22 points to close weekend at 41,176.14 points. Aggregate market value of all quoted equities rose from the week’s opening value of N20.978 trillion to close weekend at N21.530 trillion.
With more than three advancers for every decliner, all sectoral indices at the NSE closed positive, underlining the widespread bargain-hunting driving share pricing. The NSE 30 Index, which tracks the 30 largest stocks, posted average gain of 2.80 per cent. The NSE Insurance Index posted the highest return of 17.48 per cent. The NSE Oil and Gas Index followed with a gain of 7.25 per cent. The NSE Consumer Goods Index rose by 3.11 per cent. The NSE Banking Index appreciated by 2.55 per cent. The NSE Industrial Goods Index rose by 2.84 per cent. The NSE Pension Index, which tracks stocks specially screened in line with pension funds investment guidelines, posted average return of 3.58 per cent while the NSE Lotus Islamic Index, which tracks ethical stocks in compliance with Shari’ah, rallied by 2.65 per cent.
Most analysts expected the rally at the Nigerian stock market to continue as investors take positions ahead of the release of the audited report and accounts and dividends for the immediate past business year.
More than three-quarters of quoted companies use the Gregorian calendar ending December 31 as business year, thus are expected to submit their full-year report not later than March 31, 2021 in line with the market rules that require quoted companies to submit their audited financial statement not later than 90 days after the end of the business year.
“In the short term, we expect the bulls to retain dominance in the market given positioning for full-year 2020 dividends amid negative real returns in the fixed income market even as we do not rule out intermittent profit-taking,” Cordros Securities stated in a review at the weekend.
Analysts at Cordros Securities, however, advised investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.
“We believe the bullish momentum would be sustained in the coming week due to positive sentiments, although we may see some profit-taking activities,” Afrinvest Securities stated.
The momentum of activities also improved at the NSE with total turnover rising to 3.447 billion shares worth N32.725 billion in 30,327 deals at the weekend, compared with a total of 3.394 billion shares valued at N19.867 billion traded in 26,808 deals two weeks ago.
The financial services sector remained the most active with a turnover of 1.714 billion shares valued at N13.352 billion traded in 15,102 deals; thus contributing 49.74 per cent and 40.80 per cent to the total equity turnover volume and value respectively. The construction and real estate sector followed with 768.131 million shares worth N4.203 billion in 430 deals while conglomerates sector placed third with a turnover of 279.799 million shares worth N578.694 million in 1,199 deals.
Low-priced stocks dominated both activities and pricing charts. UPDC Real Estate Investment Trust, Mutual Benefits Assurance Plc and Transnational Corporation of Nigeria Plc were the most active stocks, with a joint turnover of 1.224 billion shares worth N4.459 billion in 929 deals, contributing 35.52 per cent and 13.63 per cent to the total equity turnover volume and value respectively.
Also, a total of 413,509 units of Exchange Traded Products (ETPs) valued at N2.454 billion were traded in 42 deals compared with a total of 196,294 units valued at N816.553 million traded in 38 deals penultimate week.
At the secondary debt market, a total of 11,420 bond units valued at N12.325 million were traded in 17 deals compared with a total of 10,051 units valued at N12.591 million traded in 27 deals two weeks ago.
There were 60 gainers against 19 losers last week compared with 50 gainers and 21 losers recorded in the previous week. Japaul Gold and Ventures, rising on the back of new business portfolio, led the gainers, in percentage terms, with a gain of 56.70 per cent to close at N1.52. Mutual Benefits Assurance followed with a gain of 50 per cent to close at 42 kobo while Royal Exchange appreciated by 47.83 per cent to close at 34 kobo per share.
On the negative side, Cutix recorded the highest loss of 12.92 per cent to close at N2.09. Daar Communications followed with a drop of 10 per cent to close at 27 kobo while Chellarams dropped by 9.96 per cent to close at N2.26 per share.