Equity market stays upbeat at 16-year high with N624bn gains



Uba Group

The Nigerian stock market remains upbeat during the 2023 election season in Nigeria, which signals a complete change of patterns in the history of Nigeria’s stock market as the positive sentiment and buying interest witnessed across all classes of stocks with a history of dividend payment has supported the uptrend.

Thus, the NGX All-Share index rebounded from the previous week’s losses to close higher last week by 2.13 percent week on week to 54,949.21 on a less than average traded volume and positive breadth. In the same manner, the market capitalization rose 2.13 percent week on week to N29.934 trillion to give investors N624 billion in profits while the year-to-date return inched further to 7.2 percent from 4.9 percent last week.

As equity market investors digest the latest macroeconomic data on Nigeria’s economic performance in 2022 and the lingering cash crunch around the economy, the domestic bourse at the close of the week and ahead of the Saturday presidential and governorship elections, trades at a 16-year high, breaking out the recent resistance levels of 54, 290.84 points on buying pressure in the midst of the uptick noticed in the fixed income market rates and yields.

Across the sectors this week, performance was largely upbeat for most of the indices that saw support from an increased inflow of funds into the equity space and continued buying sentiments, except for the insurance index that closed the week in a quiet mode. Meanwhile, positive price movement was seen in the Consumer Goods (+6.30%), Oil & Gas (+2.73%), Banking (+2.217%), and Industrial Goods (+0.34%) indexes through the week as investors posed their expectations for the early filers from these sectors to start hitting the market with their 2022 full-year scorecards even as the presidential and national assembly elections draw closer.

At the close of the week, the level of market trading activities was varied as we saw the total number of deals decrease further by 10.3 percent week on week to 14,194 as stockbrokers recorded a 6.36 percent surge in trade volumes to 799.85 million units valued at N8.01 billion, indicating a decrease by 39.4 percent week on week. Meanwhile, the top-gaining securities for the week were MRS (+33%), CONOIL (+21%), and BUAFOODS (+16%), while the week’s losers were CAPHOTEL (-9%), VITAFOAM (-7%), and NEIMETH (- 6%). Going into this week, analysts expect mixed and positive sentiments to continue as market players digest the Q4 GDP figure of 3.52 percent even as the results from the presidential and national assembly elections begin to fall in.

Also, the recent uptick in rates seen in the fixed income market at the end of the last treasury bills auction in the midst of corporate earnings expectation, portfolio rebalancing and elections jittery are expected to drive sentiments in the market. However, we advise investors to trade companies with sound fundamentals and, as such, should take advantage of price corrections in line with domestic and global trends.

At the money market, the CBN refinanced matured T-bills worth N133.69 billion via the primary market at higher rates for all maturities; the stop rate for the 91-day bill rose to 3.00 percent (from 0.10%), the 182-day bill increased to 3.24 percent (from 0.30%), and the 364-day bill jumped to 9.90 percent (from 2.24%), respectively. Also, N70 billion worth of Treasury bills matured via OMO, which, combined with the primary market maturities, resulted in total inflows worth N203.69 billion. Given the huge inflows of N380.22 billion as well as FAAC allocations for January worth N750.17 billion, NIBOR moderated for all tenor buckets tracked amid the financial liquidity boost: NIBOR for overnight funds, 1-month, 3-month, and 6-month tenor buckets sank to 10.90 percent (from 16.40%), 10.95 percent (from 16.15%), 11.75 percent (from 16.80%), and 12.40 percent (from 17.00%), respectively. However, NITTY rose for most maturities tracked as investors demanded higher yields despite the financial liquidity ease: yields on 1-month, 3-month, 6-month, and 12-month tenor buckets rose to 2.77% (from 1.44%), 3.46 percent (from 1.86%), 4.19 percent (from 2.40%), and 5.88 percent (from 3.88%), respectively.