The equities market on Friday gained the most in over a month amid expectations of a “Santa rally” in the market that could end December with its worst monthly performance in a decade.
Stocks rose 1.25 percent, the highest in a day since a 1.84 percent increase in mid-November. The performance improved month’s return to negative 2.17 percent and year’s return to negative 15.95 percent raising hopes that the remaining two trading days help to lift month’s return to the usual positive region.
“Over the last decade, the month of December has consistently recorded gains save for 2009, a phenomenon which has been referred to as “Santa Claus” rally,” said Lagos-based CSL Stockbrokers in a note to clients over a week ago.
Decembers since a negative 0.87 percent decline in 2009 have gained for the month. The average return has been 3.31 percent according to BusinessDay computation, which puts negative 2.17 percent month-to-date on Friday at a record decline.
Read also: Santa ignores NSE market as stocks on track for worst December since 2009
However, expectations are for a mild rally in the remaining trading days, expected to be driven by year-end portfolio rebalancing activities as well as early positioning by early birds in high-yield dividend stocks with attractive entry points ahead of their full-year 2019 earnings announcement.
This rally has seemed elusive but Friday’s surge has rekindled hopes of consistent strong gains in the remainder of the year for stocks.
On Friday, NEM Insurance gained 10 percent to lead the advancers while Nestle (+10%), and UACN- Property Development Company (+9.52%), University Press (+9.4%) and Wapic (+9.09%) according to Bloomberg data. On the other hand, May & Baker (-9.81%), WemaBank (-7.25%), Guinness (-6.24%), Sterling Bank (-5.37%) and Japaul Oil and Maritime Services (-4.55%) were the biggest losers for the day.
Consumer goods index advanced the most by some 5 percent while Insurance trailed with almost 2 percent. On the other hand industrial goods index remained flat while oil and gas suffered a decline.
BusinessDay estimates that a 2 percent gain in the last remaining three trading days of the year would suffice in helping the market maintain a positive December rally trend.
However the market will still end the year at a double digit loss which would extend the bearish sentiment which started in 2018 to a second year. This would see the Nigerian Stock Exchange (NSE) end 2019 as one of the worst-performing globally.
Outlook for 2020 is for a slight improvement in market condition although it is not certain that the market might see a significant rally in the coming year.
