Driven by a combination of capital appreciation, new and supplemental listings, the value of Nigeria’s equities market rose by N10.12 trillion in 1o months, BusinessDay analysis of official data shows.
The market’s return stood at 35.09 percent as of October, higher than the country’s inflation rate, which rose to a fresh 18-year high of 26.72 percent in September. Many stocks surpassed the performance of the broader market, recording over 100 percent return.
Chams Plc led the pack. The stock rose most by 909.1 percent in the 10 months to October, followed by CWG Plc, which saw a return of 728.7 percent, and MRS Oil Nigeria Plc, which increased by 679.8 percent. Investors in Transcorp Hotels reaped about 610.4 percent return.
Stock market adds N10trn in 10 months
The market opened this year with its All Share Index and equities capitalisation at 51,251.06 basis points (bps) and N27.915 trillion, but they increased to 69,236.19bps and N38.038 trillion respectively as of October 31.
During the period under review, new equity listings were valued at N212.76 billion, comprising private placements, listings by introduction, and other forms of listings on the Nigerian Exchange Limited (NGX).
For instance, Guinea Insurance Plc did private placement worth N9.1 billion. VFD Group Plc listed its shares worth N46.53 billion by introduction. Chapel Hill Denham NIDF worth N92.53 billion was listed by introduction.
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MTN Nigeria Communications Plc listed its shares worth N12.82 billion from scrip dividends scheme.
Fidelity Bank Plc did a private placement valued at N13.97 billion. Sterling Financial Holdings Company Plc’s scheme of arrangement (from Sterling Bank) was valued at N46.06 billion. FTN Cocoa Processors Plc listed shares worth N850 million from convertible debt, while Neimeth International Pharmaceuticals Plc did a rights issue of N3.68 billion.
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Other stocks that exceeded 100 percent return include FTN Cocoa, which increased by 493.1 percent, Transnational Corporation Plc (461.9 percent), Nascon Allied Industries Plc (415.3 percent), Skyway Aviation Handling Company Plc (407 percent), Japaul Gold & Ventures Plc (321.4 percent), and Nigerian Aviation Handling Company Plc (321.1 percent).
The equities market has been on an upward trajectory since the following the implementation of a series of reforms including the removal of fuel subsidy and the liberalisation of the foreign exchange market.
Wale Edun, finance minister and coordinating minister of the economy, had on October 23 announced that the government was expecting $10 billion FX inflow to shore up the nation’s external reserves and increase the supply in the FX market.
The stock market had at the beginning of November hit another all-time high, as the broader index crossed the 70,000bps mark. Investors have shown remarkable buy-interest in stocks with good performance following the third-quarter earnings season.
“Last week the Model Equity Portfolio rose by 4.80 percent compared with a rise in the NGX All-Share Index of 4.56 percent, outperforming it by 24 basis points. Year-to-date, it has risen by 41.48 percent compared with a rise of 36.97 percent in the NGX All-Share Index, outperforming it by 451bps,” said analysts at Lagos-based Coronation Research in their November 6 note.
“The market is clearly happy with the progress being made addressing shortfalls in the foreign exchange market and we attribute its performance to renewed confidence among domestic investors,” they added.
CardinalStone Research analysts, in their November 6 note to investors, said the market crossing the 70,000bps mark for the first time in history and advancing by 4.56 percent was its biggest weekly gain since June 16, 2023.
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The analysts also noted that the recent delivery by the Central Bank of Nigeria (CBN) of some outstanding matured FX forwards in some banks can provide more support to the stock market “as investors continue to assess opportunities that may open up in a post-FX backlog environment”.
Thomas Wyatt Nigeria Plc went up by 316.5 percent in the 10-month period; Golden Guinea Breweries Plc, 288.9 percent; Ikeja Hotel Plc, 280 percent; Northern Nigeria Flour Mills Plc; 224.4 percent; BUA Foods Plc, 212 percent; and Conoil Plc, 202.6 percent).
Tripple Gee and Company Plc rose by 201.3 percent, United Bank for Africa Plc, 175 percent; Geregu Plc, 165.4 percent; Cornerstone Insurance Plc, 150 percent; Sterling Financial Holdings Plc, 146.4 percent; Etranzact Plc, 140 percent; Lasaco Assurance, 127.6 percent; and Stanbic IBTC Holdings Plc, 124.2 percent.
In their November 8 stock recommendation, Futureview Research analysts anticipate continued positive trading “as sentiments from the last week still prevails”.
“We advise investors to invest in high-quality stocks with strong fundamentals supporting them,” they said.
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Other major advancers that exceeded 100 percent include Axa Mansard Plc (122.5 percent), Oando Plc (121.9 percent), Berger Paints Nigeria (120 percent), Eterna Plc (116.7 percent), John Holt Plc (115.1 percent) and Access Holdings Plc (101.8 percent).
While acknowledging that prevailing positive sentiment will continue to influence the direction of the market, analysts at Meristem Research said their optimism will be supported by recent developments, including increased market activity level and turnover, strengthening of the naira, and the measures taken by the CBN to address FX backlog issues.
They however did not rule out the prospects of profit-taking activities and a potential rotation of funds due to uptick in fixed income yields.
