Biggest single-day gain in 2yrs
•As investors gain N1.51trn
Precisely, the All Share Index advanced to 55,738.35 points from 52,973.88 points, driven by strong performance in some heavyweights, MTN Communication Nigeria Plc (+7.53%), Dangote Cement Plc (+7.41%) and BUA Cement Plc (+4.55%), alongside gains in all the banking stocks.
Similarly, the market capitalisation of all listed equities rose by the same margin to N30.350 trillion from N28.845 trillion in the last trading session.
Economists and investment analysts that spoke to Vanguard attributed the positive sentiment to the smooth transition and the reform prospect of President Bola Tinubu’s administration.
They, however, opined that the new president must match his words with action to sustain the gains recorded yesterday.
She stated: “It may also be a positive response to the president’s inaugural speech, which gave very firm assurances of a government willing to take on critical fiscal and monetary reforms in the areas of subsidy suspension, foreign exchange supply and price unification, interest rate reduction fiscal reforms, focus on agriculture, commodities and infrastructure.”
Uche Uwaleke, Professor of Capital Market and President, Capital Market Academics of Nigeria, speaking, said: “I think investors are upbeat regarding reforms prospects, especially the aspect that touched on exchange rates unification, fuel subsidy removal and fiscal incentives to encourage foreign investments.
“The banks are the avenues through which capital flows into the country and so, it’s not surprising that the banking index gained over 8%.”
Agreeing with others, David Adonri, Vice Chairman, Highcap Securities, stated that President Tinubu’s economic direction may have resonated well with investors, hence the sudden upsurge in investors’ confidence.
Speaking in the vein, Mallam Garba Kurfi, Managing Director/CEO, APT Securities & Funds, noted that the aspect of the president’s speech regarding the unification of the exchange rate, which had hitherto driven foreign investors from the stock market, may have triggered the upbeat.
Way forward
David Adonri of Highcap Securities observed that sustaining the tempo is a difficult task, saying that the market is influenced by socioeconomic conditions.
“It will take time for the economy to become sound again; Interest rate must decline to the level where yield on equities can surpass yield on debt, thus giving equities competitive advantage.
Toyin Sanni of Emerging Africa Capital Group said there is the need for the new administration to follow through its promises with concrete action in order to sustain the tempo.
According to her, early formation of the cabinet and other critical appointments would help.
She further stated that tackling the interest rate and other reforms impacting on the real sector would be of critical importance.
“There should also be immediate measures to ameliorate the harsh impact of withdrawal of subsidies on the masses.
Mallam Garba Kurfi stated that the removal of double taxation and any other issues that hinder foreign investors from accessing the market, removal of fuel subsidy, reduction of MPR, which will lower the cost of funds among others, should be tackled.
Meanwhile, analysis of the sectoral performance showed that all the sectors advanced with the banking sector, leading with 8 percent gains, while the consumer goods (+6.5%), industrial goods (+6.1%), oil & gas (+4.0%), and insurance (+2.3%) also recording appreciable gains.
Further analysis of day’s market activities showed that trade volume rose 133.5% to 1.08 billion units, while traded value was up 106.07% to N15.80 billion.