The Nigeria stock market hit a 15-year high last week to cross the 50,000 basis point mark despite uncertainties and projected economic headwinds in the country’s business environment. The record shows that in the past two decades, the domestic bourse was highest at 58,562.1bp in January 2008.
At the close of the market last week, the Nigerian Exchange Limited All-Share Index and market capitalization extended gain by 2.61 per cent to close at 50,935.03 and N27.46 trillion respectively, as investors smiled to the banks with N699 billion.
According to stock market analysts, the market was buoyed by impressive corporate earnings, soaring crude oil prices and renewed foreign investor interest. This has led the market to record a five-week consecutive gain. It is expected to rise further in the new week “as investors buy more shares in anticipation for positive Q1 2022 company releases,” analysts at Cowry Asset Management stated in their report.
What is the major driver of the bullish trend, in the Nigerian stock market is good earnings being reported by most highly capitalized securities such as Nigerian Breweries, MTN Nigeria Communications, Airtel Africa and Guinness, an Investment and Portfolio Analyst, Abel Ezekiel, told InsideBusiness.
He, however, urged investors to be watchful as the stock market does not move in a one-way traffic direction. “It gets to the overbought region as most traders seek for quick profit hence if caution is not observed you may end up buying some securities higher than its intrinsic value, leading to loss of money which will take time to recover, as the market is dominated by short time traders.
”This is as prolonged high inflation and uncertainty in the business environment are taking a toll on the stock market. Inflation surged further in the month of March 2022, hitting a 5-month high at 15.92 per cent. The World Bank had said the country might have one of the highest inflation rates globally in 2022, with increasing prices diminishing the welfare of Nigerian households. According to the report, Nigeria is also projected to have the seventh-highest inflation rate among sub-Saharan African countries in 2022.
The country currently ranks 131 among 190 economies in Ease of Doing Business, according to World Bank’s ratings.
However, a total turnover of 1,598 billion shares worth N19.60bn in 21,494 deals was traded by investors on the floor of NGX, in contrast to a total of 8.205 billion shares valued at N49.15bn that exchanged hands, the week before, in 28,622 deals.
Measured by volume, the financial services industry retook its position to lead the activity chart with 1.057 billion shares valued at N7.73bn traded in 8,670 deals; and contributed 66.15 per cent and 39.42 per cent to the total equity turnover volume and value respectively. While the conglomerate’s industry followed with 148.174 million shares worth N250.57m in 852 deals, the consumer goods industry traded a turnover of 145.471 million shares worth N5.23bn in 4,557 deals.
The top three traded stocks, Union Bank of Nigeria, FCMB Group, and Transnational Corporation, measured by volume, accounted for 547.576 million shares worth N2.33bn in 957 deals and contributed 34.26 per cent and 11.89 per cent to the total equity turnover volume and value respectively.
Champion Breweries, International Breweries, Cadbury Nigeria, Fidson Healthcare and Nigerian Breweries led the gainers’ table, as their share prices increased by 32.54 per cent, 32.35 per cent 32.20 per cent, 23.07 per cent and 22.59 per cent, to close at N3.34, N1.6.75, N13.55, N10.03 and N70 respectively.
As investors bought shares of companies with sound fundamentals, the domestic bourse maintained a Bull Run as most of the sectors tracked closed in positive territory amid sustained buy pressure. The consumer goods, industrial goods, and NSE30 increased by 7.21 per cent, 3.23 per cent, and 3.34 per cent to close at 662.68 points, 2185.25 points, and 1,949.17 points respectively.