Key highlight
- Market capitalization recorded a gain of N1.628 trillion in the first quarter of 2023.
- Crave to increase capital gains on the back of low prices of stocks owing to upset in the financial market arising from unstable policies and build-up to the 2023 general elections also drove investors’ interest.
- The equities market is defying current political uncertainties because investors are futuristic that the prospect for a yield environment is bright.
Equity trading on the Nigerian Exchange Limited (NGX) finished the first quarter of the year in the green territory as the NGX All-Share Index appreciated by 5.8% to close at 54,232.34 index points.
Despite the rising inflation, interest rate hike, and Naira redesign, and above all 2023 general election jittery which were expected to further dampen the market confidence in the nation’s local bourse equity, investors increased their buying pressures on the expectation of the impressive full-year 2022 corporate earnings results.
Market performance
Available statistics to the Nairametrics showed that the All-Share Index, which is the broad index that measures the performance of Nigerian stocks, opened the trading quarter at 51,251.06 index points at the beginning of trading on January 2023 and closed at 54.232.34 points at the end quarter 0n Mach 31, gaining 2,981.28 basis points or 5.8%.
Further analysis revealed that activities on the Nigerian Exchange Limited (NGX) which opened the trading year at N27.915 trillion in market capitalization at the beginning of trading, closed the quarter at N29.543 trillion, hence has earned a quarter-to-date gain of about N1.628 trillion or 5.8%.
Market analysts believed the renewed sentiment in the local bourse market had also grown following crave to increase capital gains on the back of low prices of stocks owing to upset in the financial market arising from unstable policies and build-up to the 2023 general elections.
Also, the expectation of dividend pay-out from the 2022 full-year results is being announced by quoted companies.
Price adjustment
The Managing Director of Crane Securities Limited, Mr. Mike Eze in a chat with Nairmetrics said that the price adjustment mechanism which the market is currently experiencing will continue during the first quarter of 2023 and that will make the market attractive.
He noted that most results particularly the banking results would come in the first quarter and investors interested in dividends will swoop on the stocks.
He added that it is likely that investors will take a position to reap the dividend these companies will declare during the quarter.
Mr. David Adonri, Executive Vice Chairman, of Hicap Securities Limited also in a chat with Nairametrics said that investors are in the earning season and that what investors will get from dividends is one of the factors that is driving the demand for shares in the market.
He noted that the equities market is defying current political uncertainties because investors are futuristic that the prospect for a yield environment is bright.
- “We are in the earning season when the market normally sustains positive sentiment, but this season is within the period of an election. I think the craving for dividends is overshadowing what would have been the impact of the elections,” he said.
Fundamental shift
The Managing Director, of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe in a chat with Nairametrics said that a Demographic shift has happened in the NGX in the last few years.
- “We now have more local institutions and retail investors in the market than foreign portfolio investors. The reverse used to be the case, this shift has naturally reduced volatility in stock prices as the locals are likely to have more faith in the local market than foreigners. That’s why you see the NGX ASI continuing to rise despite all the uncertainties in the environment. My prognosis is that while we might see a slowdown as we move closer to the elections we are unlikely to see a significant decline in stock prices mainly because of what I have highlighted. However, if the election were to degenerate into chaos then the scenario might change significantly,” he said.
What you should know
At the end of trading on the floor of NGX on Friday, Investors exchanged 557.3 million shares valued at N3.68bn in 3,943 deals, compared to the previous day’s tally of 73.54 million worth N4.23bn in 3,718 deals. In total, the market had done N265.48bn in value from 18.04 billion shares in 232,632 deals.
The top ten gainers at the end of the week were Oando Plc, whose stock rose by 34.12% on the back of earnings announcement and acquisition plans; Ikeja Hotel Plc (18.45%); Champion Breweries Plc (13.27%); Royal Exchange Plc (13.04%); UPDC Plc (11.46%); Consolidated Hallmark Insurance Plc (9.68%); Northern Nigeria Flour Mills Plc (8.64%); Sunu Assurance Plc (8.33%); Linkage Assurance Plc (7.50%); and Sterling Bank Plc (6.67%).
The major decliners were Prestige Assurance Plc (-11.11%); NCR Nigeria Plc (-9.79%); CWG Plc (-9.38%); Dangote Sugar Refinery Plc (-7.10%); United Capital Plc (-6.67%); Dangote Cement Plc (-6.25%); CAP Plc (-5.79%); Airtel Africa Plc (-4.50%); Seplat Energy Plc (-4.17%); and Chams Holding Company Plc (-4.00%).