Shares of Guinness Plc regained momentum on Friday as the bears whipsaw the bears on the floor of the Nigerian Stock Exchange. Diageo-owned Guinness gained 10percent to close trading at N28.60, the biggest daily gain since September 7th 2017, its share price had earlier in the month plunged to N23.30, the lowest in five years.
Interestingly, as the effects of the apex bank’s policies in the fixed income market continue to ripple across the capital markets, investors flocked to the equities market this week in search of yield and drove the domestic bourse to its largest weekly gain since the week of the 23rd August 2019.
At the close of trading on Friday, All-Share index rose 2.0percent to 26,851.68 points, closing in the green on 3 of 4 trading sessions, which reduced the YTD loss to -14.6percent. On sectors, the Banking gained 6.8percent, Industrial Goods gained 3.2percent indices sustained last week’s gains, with the Consumer Goods (+2.6%) index joining the leaders’ list. Conversely, the Oil & Gas (-1.8%) and Insurance (-0.6%) indices closed in the red.
Analysts expect to see gains in fundamentally sound stocks as investors’ sentiment towards the equities market improve.
Read also: Guinness slips into loss in Q1 on slower sales, high finance cost
“Nonetheless, we maintain that this might be short-lived as economic buffers are still absent,” Afrinvest said.
Wale Okunrinboye, head of research at Lagos-based Sigma Pensions Ltd, in terms of sustainability, this is not fundamentally driven because the economy is yet to improve.
The renewed market resurgence follows a move by the CBN to limit participation in high-yielding OMO market which sent real returns on T-bills below zero, forcing big domestic investors back to equities.
The move to restrict the OMO market to banks and foreign investors have left big domestic investors, mostly pension funds and insurance companies, with idle funds and caused heavy demand at a primary market NTBills auction on Wednesday.
The OMO bills accounted for N13trn of total liquidity in the money market, while treasury bills accounted for N2trn.
Consequently, the interest rates on Nigerian Treasury bills collapsed to within single digits for the first time since 2016, fuelling a hunt for lucrative opportunities outside the fixed income space.
