Three listed cement companies on the floor of the Nigerian Exchange Group Plc (NGX) recorded a combined gain of about N7.921 trillion at the close of the first quarter of 2024.
This was contained in the trading statistical report of these companies which include Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc tracked by Nairametrics.
The shares of the companies defied prevailing economic challenges such as elevated inflation, a depreciating exchange rate, and persistent security concerns.
The prevailing optimism manifested in discernible shifts in purchasing behavior, culminating in the All-Share Index reaching a noteworthy close at 104,562.06 index points by the end of the quarter.
Moreover, the year-to-date (YTD) return of the NGX All-Share Index shows its resilience, standing at an impressive 39.84%.
Despite the backdrop of escalating inflation, prospective interest rate adjustments, and volatile exchange rates, investor confidence has displayed remarkable steadfastness in the Nigerian equities market. This unwavering assurance has, in turn, spurred heightened market activity and intensified buying engagements.
Breakdown of performances:
Checks by Nairametrics revealed that Dangote Cement Plc, one of the major Cement manufacturers listed on the industrial goods sub-sector of the Nigerian Exchange Group Plc (NGX) led with a gain of about N6.250 trillion during the first quarter of the year.
The cement stock grew by 114.66% to close at N686.70 per share and N11.701 trillion in market capitalization during the review period from N319.90 and market capitalization of N5.451 trillion it opened for trading on January, hence has earned a gain of N6.250 trillion.
BUA Cement Plc also listed in the industrial goods sub-sector of the NGX followed with a gain of about N1.565 trillion during the period.
Its stock price grew by 47.6% to N143.20 per share and N4.849 trillion in market capitalization as against N97.00 and N3.284a trillion in market capitalisation which was the opening figure at the beginning of trading activities in January 2024.
Lafarge Africa trailed with a marginal 20.79% growth to N38.05 per share and N612.901 billion in market capitalisation from N31.50 and N507.395 billion in market capitalisation at the beginning of the trading year.
What market expert said
Mr. David Adonri, Executive Vice Chairman, Hicap Securities Limited in a chat with Nairametrics said that although in times of escalating interest rates, the financial assets tend to migrate from equities to the debt market or fixed-income securities, however, investors also take a position on stocks that are elastic in demand.
He noted that areas that are elastic in demand like consumer goods stocks and banking stocks are likely to be stocks to pick up during interest rate hikes.
- “The banking sector is always the veritable area, particularly during this period of interest rate hikes and inflation. Banks such as Zenith Bank Plc, UBA Plc, GTCO Plc, Access Bank Plc Fidelity Bank Plc, and Stanbic IBTC are good investment destinations. Industrial goods sectors such as Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa are also good to buy in this period. Oil and gas stocks are also likely to benefit from the inflation.
Adonri also noted that investors were in the earning season and that what investors would get from dividends was one of the factors that drove the demand for shares in the market during the period.
He noted that the equities market is defying current political uncertainties because investors are futuristic that the prospect for a yield environment is bright.
- “Most companies, especially banks, released their half-year results during the quarter. The market normally sustains positive sentiment during the earning season.
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.”
Amolegbe further said that the expectation that the policies will encourage the inflow of foreign investment is the primary trigger that is causing the stock market rally.
- “The second trigger will include the fact that some of these policies will lead to a short-term increase in inflation level and typically stock prices tend to rise along with inflation,” he said.