The Nigerian Exchange witnessed gains throughout last week , with the the All Share Index closing 0.79% higher (week on week) as the market witnessed a ‘Santa Claus Rally’ to usher in Christmas.
The Santa Claus Rally, also known as the December effect, is a term for the occurrence of more frequent than average stock market gains as the year winds down.
The rally describes a sustained increase in the stock market that occurs in the week leading up to December 25.
Some explanations for the Santa Claus rally include increased holiday shopping, optimism fueled by the seasonal spirit, and institutional investors relaxing their books before going on Christmas vacation.
Top gainers: The top 10 gainers which help to lift the market index to 0.79% include Thomas Wyatt Nigerian Plc, Royal Exchange Plc, Champion Breweries Plc, Ardova Plc, Custodian Investment Plc, Julius Berger Nigeria Plc, University Press Plc, Fidelity Bank Plc, Geregu Power Plc and Honeywell Flour Plc.
Breakdown of top gainers: Checks by Nairametrics showed that Thomas Wyatt Nigerian Plc led top ten gainers with a whopping gain of 42.11% or 24 kobo to close at 81 kobo from 57 kobo the previous week. Royal Exchange followed with a gain of 16.67% or 14 kobo to close from 84 kobo per share the previous week to 98 kobo. Other gainers are:
- Champion Breweries grew by 14.63% or 60 kobo to close at N4.70 per share from N4.10 per share.
- Ardova Plc recorded a gain of 12.57% or N2.10 to close at N18.80 per share from N16.70.
- Custodian Investment Plc grew by 11.21% or 60 kobo to close at N5.95 per share from NN5.35.
- Julius Berger Plc rose by 9.91% or N2.10 to close at N23.30 per share from N21.20.
- University Press Plc reported a gain of 9.83% or 17 kobo to close at N1.90 per share from N1.73.
- Fidelity Bank Plc grew by 9.41% or 40 kobo to close at N4.65 per share from N4.25 per share.
- Geregu Power Plc gained 8.96% or N9.50 to close at N115.50 from N106.00.
- Honeywell Flour Mills Plc trailed with 8.96% or 19 kobo to close at N2.31 per share from N2.12.
Portfolio rebalancing: Despite the perception that pre-election years are usually characterized by negative sentiments which also results in the exit of foreign investors, market experts believe that the desire of institutional investors to rebalance the structure of their portfolio towards the end of the year is a major factor propelling the equities market on the green trajectory.
Mr David Adonri, the Executive Vice Chairman of Hicap Securities Limited, told Nairametrics that the massive positive movement of the market last week came as a surprise and beat everybody’s imagination, going by the inflationary pressure and hike in interest rate.
- “This is due to the end-of-the-month effect which means that portfolio managers usually buy more shares at the end of every month to rebalance their portfolios. These managers always take a position on some big stocks like Cement companies, telecom firms, and banks to rebalance their portfolio at the end of every month,” he said.
Mr Ariyo Olushekun, the Vice-Chairman/CEO of Capital Assets Limited, also told Narametrics that the market may be witnessing the beginning of the end-of-year rally.
Olushekun noted that the market has gone down in the recent month and has started appreciating which is normal to stock markets in every clime. He said:
- “Very few firms are driving the market, they are not up to 20 companies that are market drivers, when they lose value because of their weight on the market, the equities will fall and when they record gains it will also make a positive impact on the market.
- “Hopefully, the market will do well as we approach the end of the year. As we approach the end of the year, we expect institutional investors to rebalance the structure of their portfolios. That’s will push them to invest in stocks that have strong fundamentals. And those are the ones that are driving the market.”
NGX performance snapshot: The NGX All-Share Index and Market Capitalization appreciated by 0.79% to close the week at 49,706.09 and N27.074 trillion respectively. Similarly, all other indices finished higher except for NGX ASeM and NGX Sovereign Bond indices which closed flat.
- A total turnover of 860.933 million shares worth N16.134 billion in 14,502 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 814.089 million shares valued at N12.204 billion that exchanged hands the previous week in 15,488 deals.
- The Financial Services Industry (measured by volume) led the activity chart with 360.234 million shares valued at N3.772 billion traded in 6,905 deals; thus contributing 41.84% and 23.38% to the total equity turnover volume and value respectively.
- The Construction/Real Estate Industry followed with 302.200 million shares worth N927.033 million in 261 deals. The third place was the Consumer Goods Industry, with a turnover of 39.078 million shares worth N1.685 billion in 2,593 deals.
- Trading in the top three equities namely UPDC Real Estate Investment Trust, FBN Holdings Plc and Guaranty Trust Holding Company Plc (measured by volume) accounted for 440.239 million shares worth N3.015 billion in 2,038 deals, contributing 51.13% and 18.69% to the total equity turnover volume and value respectively.