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In nine unbroken days of unprecedented yuletide rally, local investors’ exposure grew, leading to a gain of over N570 billion in the market capitalization of the Nigerian equities market, a development, never seen in decades of the bourse existence.
Last week, the market capitalization had cumulatively gained ₦212.31 billion week-on-week to close at ₦27.07 trillion.
Since Wednesday, December 14, the market has sustained an unbroken bullish run, with the benchmark All Share Index rising by 2.16 per cent or 1, 056.64 basis points to close at 49,910.18 points, up from 48,853.54 basis points on Tuesday, December 13.
The market capitalization which measures the value of traded equities also rose by an equal percentage from N26.61 trillion on Tuesday, December 13 to close at ₦27.18 trillion on Wednesday, December 28 as trading resumed in the holiday-shortened week.
Some dealing members of the Nigerian Exchange confirmed it was unprecedented, but could not buy into the speculation that illicit funds stashed by politically exposed persons may have been carefully poured into the hitherto liquidity-starved market.
“It is speculative; you cannot really say for sure that money stashed by politically exposed persons may have found its way into the market. What is evident to us as a fact is that Nigerian investors have increased their exposure in the capital market. We see that over 60 per cent of market transactions are dominated by domestic investors contrary to what used to happen before COVID-19 when we saw that the market was dominated by foreign investors. There is a fact to that. But who is buying stocks currently is purely speculative.
We don’t know. It is something that needs to be investigated,” Teslim Shitta-Bey, a capital market analyst attached to Proshare, told our correspondent over the telephone on Wednesday.
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He argued that if the speculation is true that illicit funds have been moved into the market, it, therefore, means that there is a lot of cash moved to some stockbrokers’ bank accounts through nominee bank accounts.
“Do we have the data showing that nominee bank accounts have risen significantly?”, Shitta-Bey queried, insisting that data and statistics must be relied upon in order to draw such a conclusion and not mere speculations.
He, however, agreed that the market defied the conventional “Christmas effect” – a season when equities market investors sell off shares to raise money for the yuletide celebration resulting in to fall in share prices across the board.
“The speculation might be right, but I am not quite clear as to which channel such funds could be brought into the capital market and get legitimized. Buying shares is not like buying a property. Account must be opened, and with a person’s name or a nominee account. Until we get data on nominee account growth; if we get one, we can then begin to investigate” says Shitta-Bey.
Meanwhile, the market capitalization gained ₦111.16 billion on Wednesday largely driven by gains in NESTLE (+2.04%), GEREGU (+9.96%), and GTCO (+3.79%). As a result, the year-to-date (YTD) return rose to 16.84 percent, up from 16.36 percent recorded at the close of trading last week in which the market gained in all five trading sessions.
Analysis of market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 4.77 percent. A total of 486.67 million shares valued at ₦3.83 billion were exchanged in 3,875 deals. ACCESSCORP (+0.58%) led the volume chart with 28.93 million units traded, while GEREGU (+9.96%) led the value chart in deals worth ₦1.03 billion.
Market breadth closed positive at a 5.50-to-1 ratio with advancing issues outnumbering declining ones.
A total of 22 stocks gained in share prices led by Cornerstone Insurance (+10%), while FTN Cocoa (-3.45%) led three other losers on the laggard’s table.
BADEJO ADEMUYIWA has 23 years experience as a Finance Writer, specialising in Insurance and Investigative Reporting.
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