BY BAMIDELE FAMOOFO
In a consecutive two-week period, the benchmark index has demonstrated a consistent upward trajectory, registering a 1.29 percent increase week-on-week and culminating at a closing figure of 65,558.91 points.
This bullish momentum has been primarily attributed to heightened buying activities and strategic positioning within the consumer goods and insurance services equities.
The resurgence of positive market sentiment can be attributed to market participants assimilating the recently published unemployment rate of 4.10 percent and Q2 gross domestic product data, which revealed a growth rate of 2.51 percent.
Stock market analysts at Cowry Research noted that these indicators are being closely evaluated for their potential impact on the broader spectrum of market instruments.
As a result of this encouraging momentum, the total market capitalization of listed equities also experienced a concurrent uptick of 1.29 percent week-on-week, reaching a noteworthy N35.88 trillion compared to the preceding week’s value of N35.42 trillion.
This ascent has translated into a substantial profit increment of N458.6 billion for investors. It’s noteworthy, however, that the year-to-date return of the All-Share Index remains an impressive 27.92 percent, underscoring the Nigerian market’s commendable resilience in the face of prevailing global uncertainties.
A sector-wise analysis reveals that the Consumer Goods and Insurance Services sectors have been particularly pronounced gainers, showcasing respective week-on-week increments of 11.58 percent and 1.22 percent. Key market players such as TRANSCORP, DANGSUGAR, and CORNERST have significantly contributed to these sectoral gains. Conversely, the Banking, Oil & Gas, and Industrial Goods sectors have encountered declines of 3.57 percent, 2.40 percent, and 0.04 percent correspondingly.
This dip can be attributed to cautious investor sentiments and divestments observed in select mid and high-cap stocks such as FBNH, JAIZBANK, CONOIL, and ETERNA. These strategic moves reflect investors’ meticulous evaluation of the intricate interplay between market dynamics and prevailing economic conditions.
Trading activity throughout the week was characterized by heightened volumes and a mixed undertone.
The weekly tally of deals registered a 5.72 percent increase, reaching a total of 31,163 deals.
Moreover, the average traded volume witnessed a robust surge of 7.30 percent, settling at 1.81 billion units.
On the contrary, the weekly average value displayed a marginal decline of 0.37 percent, measuring N29.3 billion in contrast to the preceding week’s figure of N29.41 billion.
As the week came to a close, several stocks demonstrated noteworthy positive rallies, effectively bolstering market sentiment. ABCTRANS led the charge with a remarkable surge of 42 percent, closely trailing TRANSCORP at 39 percent, and DANGSUGAR at 36 percent.
These exceptional performances captured the discerning attention of astute investors.
Conversely, REDSTAREX faced a downturn of 17 percent, while JAIZBANK and FBNH experienced respective declines of 14 percent and 12 percent due to adverse price dynamics.
Looking ahead, the prevailing trend of buoyant sentiment is expected to persist, supported by the ongoing digestion of robust economic data spotlighting Nigeria’s commendable output performance and positive trajectory. Nevertheless, the continued market response to elevated T-bill rates, juxtaposed with renewed interest in bargain opportunities and portfolio realignments, remains a focal point.
It would be recalled that the National Bureau of Statistics announced last week that the Q2 2023 GDP growth stood at a modest 2.51 percent. Coupled with the +2.31 percent from Q1 2023, the overall growth for the first half of 2023 was only +2.41 percent.
Non-oil activities primarily drove Q2 2023 GDP, contributing 94.66 percent. Services led the way with 58.42 percent, followed by agriculture with 23.01 percent. The industrial sector, on the other hand, contributed less than a fifth. Among the 18 sectors measured, 16 grew, indicating a slight improvement from Q1 2023 when three sectors contracted.
Notable growth was seen in Financial and insurance (+26.84%), Water Supply and Waste Management (+20.56%), and Trade (+2.41%).
However, Transport (-51.64%), Mining (-12.16%), and ICT (8.6%) saw a decline in GDP growth due to a significant reduction in the transport sector’s output, which fell by -55 percent. With GDP growth below the population growth rate of 2.4 percent, analysts stress the need to address short-term rigidities affecting prices, disposable income, and growth.
The economy is expected to feel the lingering effects of fuel subsidy removal and Naira devaluation throughout H2 2023.
While the IMF predicts 3.2 percent growth for FY2023, analysts project sub-3 percent growth.