The Nigerian equity market on Monday recorded its highest daily gain to extend its gaining streak to 3 consecutive trading days since the listing of MTN last Thursday.
At the close of trading on Custom Street, the Nigerian all share index (ASI) picked up by 1.74 percent.
The stocks market neared 2 percent daily growth although reports on Q1 GDP showed a slow down by 16 percentage points from 2.38 percent in the fourth quarter of 2018 to settle at 2.01 percent in the first quarter of 2019.
However, analysts opined that the performance of the Nigeria all share index was independent of the GDP report-which they said, did not catch investors’ by surprise.
“The slowdown witnessed in the economy was a resultant effect of the 2019 general elections in Q1,” Gbolahan Ologunro, analyst at CSL stockbrokers opined, “This had already been envisaged by investors as witnessed also in the fourth quarter of 2018, hence, priced into the market.”
Gains in the day’s trading session pared year to date loss from -8.14 percent as at friday of the previous week to -6.54 percent.
Fola Abimbola, Equity analyst at FBNQuest also explained that the effect the growth in the economy on the stock market would be very minimal.
“Anybody that would take a position on stocks would not be based on the fact that GDP growth didn’t outperform the previous quarter, ’’ he stated.
The analyst explained that the major driver for stocks on the exchange is their quarterly numbers which failed to impress in Q1 2019 on the heels of “election uncertainties, as most Company management claimed,” Abimbola explained.
The Nigeria stock market began experiencing a rebound on the market index, ending its bearish trend upon listing by introduction of the shares of Telco giant MTN which has seen investors gain in value about N2.2 trillion in the last 3 trading days.
While some equity investors who had hoped to become one of the owners of the telecoms company are still yearning despite existing shareholders of MTN Nigeria are largely unwilling to offer their holdings, buy pressure from “the big money bags” have seen share price of MTN rally at an average of 9.98 percent in the last 3 trading days.
Analysts however anticipate that upon the Telco giant reaching its intrinsic value which is assumed to range between N150 to N190 based on various valuations by analysts, the market will stabilised and existing negative sentiment may set in.
David Ibidapo & Segun Adams
