Investors reap N1.67trn profit in equities market amidst CBN’s rate hike, weak GDP growth

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BY BAMIDELE FAMOOFO

Uba Group

Stock market investors defied the decision of the Monetary Policy Committee of the Central Bank of Nigeria to increase Monetary Policy Rate last week with a bullish investment in blue chip stocks which resulted in a gain of N1.67 trillion in the week ended November 25, 2022.

According to data released by the Nigerian Exchange Limited, the upbeat in market performance in the review week was buoyed by price appreciation as well as strong investor demand in most of the bellwether stocks through the week.

With the bullish outing recorded across board in the market, investors sustained their portfolio repositioning strategy on the strength of the recent corporate earnings reported by companies and mirrors that investors are hedging against the hounds of inflation in some stocks with high dividend yields and strong earnings to support higher payout as the financial year end of many companies draw closer.

“As market players digest the latest weak economic growth data released by the Nigerian statistics bureau, which checks the impact of the aggressive rate hike by the CBN, the local bourse for another consecutive week of bullish performance saw strong momentum and strength, practically ignoring the latest 100 basis points rate hike by the Central Bank of Nigeria, which raised the Monetary Policy Rate to 16.5%, representing 500bps increase MPR so far this year,” Cowry Asset Management explained the outcome of the market for the week in a report .

Thus, the NGX benchmark index surged 6.9 percent week on week to 47,554.34 points while the market capitalization inched higher by 6.9% week on week to N25.90 trillion and crossed the N25 trillion mark for the first time since mid-October 2022.

Consequently, there was gains from price appreciation in Insurance, banking and industrial goods tickers such as Nigerian Breweries Plc , (+19%), Cornerstone Insurance Plc, (+16%), Dangote Cement Plc, (+10%), Multiverse Plc, (+10%) and Sovereign Trust Insurance Plc, (+17%) respectively.

Further afield, the sectoral performance was largely bullish in the week with 3 out of 5 sectors closing northward.

Thus, for the NGX Industrial Sector emerged the leading advancer (+9.16%) and trailed by NGX Insurance and NGX Banking Index which also closed positive by +3.91 percent and +2.54 percent from the prior week. On the flip side, sell -offs in NESTLE (-21%), SEPLAT(-4%) dragged the performance of the NGX Oil & gas (-1.29%) and NGX Consumer Goods (-0.17%) sectors southward.

Meanwhile, the level of trading activities in the week was bubbly as the total traded volume surged by 2.48 percent week on week to 711.62 million units.

Also, the total weekly traded value shot upward by 25.53 percent week on week to N9.81 billion and then the total deals traded for the week increased by 8.07 percent week on week to 16,662 trades from 15,418 deals last week.

Going into the new week, stock market Analysts expect the market to trade with mixed sentiments as the digestion of the current MPC rate hike and weak economic growth data put investors in a reactive position on the next move in the market.

Cowry Asset further disclosed, “However, we continue to advise investors to trade on companies’ stocks with sound fundamentals and a positive outlook amid the macro-dynamics which remains a headwind.”

Similarly, a total of 7,712 units valued at N980, 634.80 were traded last week in 31 deals in the Exchange Traded Fund market compared with a total of 7,014 units valued at N495,893.36 transacted last week in 34 deals.

Also, a total of 21,215 units valued at N22.462 million were traded in 10 deals in the Bond market compared with a total of 58,708 units valued at N58.646 million transacted last week in 21 deals.

Forty-nine (49) equities appreciated in price during the week, higher than thirty-one (31) equities in the previous week. Nineteen (19) equities depreciated in price lower than thirty-three (33) in the previous week, while eighty-nine (89) equities remained unchanged, lower than ninety-three (93) equities recorded in the previous week.