Nigerian stock market records 19.44% growth in Q1’13

In the first-quarter (Q1) ended March 2013, the Nigerian stock market yielded a return of 19.44 percent.

This rise is evidenced in the rally witnessed in Nigerian Stock Exchange (NSE) All-Share Index, which stood high at 33,536.25 points last week ahead of the public holiday.

Other indicators at the market in Q1’13 showed 19.97 percent returns on blue-chip stocks –evidenced in the 1,602.88 points level of Bloomberg NSE 30 Index.

As the Bloomberg NSE Consumer Goods Index stood at 983.67 points, the Q1’13 yield for stocks in this basket was high at 17.25 percent. Also, the Bloomberg NSE Banking Index that closed Q1’13 at 412.35 points yielded 21.41 percent in the review quarter.

Bloomberg NSE Insurance Index yielded 30.42 percent after it closed at 154.53 points at the end of Q1’13. For Bloomberg NSE Oil/Gas Index, it was 29.61 percent return in Q1’13 at 198.20 points, while for NSE – Lotus II at 2,221.15 points, the yield rate for stocks in that basket was 25.55 percent.

Already, analysts anticipate further sentiment on value stocks to sustain this positive trend in this second quarter (Q2) on their belief that investors will further dig-in to expand their equity portfolios. Rising from the Easter holiday, a bullish outlook in the coming session may push some equities further high.

According to analysts at Partnership Investment Company plc, “As more favorable corporate results hit the market this week, we expect the price of many equities to rev up. Equities in the consumer goods, agriculture and conglomerates may attract much bid. Intermittent sell down may prevail but this is not expected to alter the market outlook.”

“The delay in the release of results, especially by companies listed in the Financial Services sector has dampened market enthusiasm as investors are apprehensive of the effect of a delayed result on company performance. This scenario has affected the market performance in the last few sessions. We anticipate that subsequent release of the result will have impact on the market as a favourable result will engender positive market sentiment and vice versa,” they analysts said.

In their equity strategy, they added: “More banking stocks are put on offer as investors play safe. This shift should be temporary as the sector remains the main market driver. Portfolio balancing with fixed income should be given consideration in order to preserve value of investment.”According to economic intelligence team at Access Bank plc, “the last week in Q1’13 was a bright one for stocks, support by increased investor demand as sentiments stayed positive.”

These analysts led by Tony Monye, say “encouraging financial scorecards released by some blue-chip companies boosted stock demand and prices. Equities are expected to continue along the upward trajectory on recent initiatives introduced to sustain interest in the market. The Asset Management Corporation of Nigeria (AMCON) is set to make some of its shares in banks for which it presently manages available for NSE securities lending. Further upswing is evidenced this week, as investors opt to lock-in on stocks believed to have strong market fundamental.”

This feat recorded in the Nigerian stock market and the future outlook come amid markets around the world reacting to Cyprus situation. The Euro zone member country is in need of a bailout in order to stabilise its financial markets.

Analysts at Financial Derivatives Company believe that if a bailout for Cyprus is not approved, this could lead to the country defaulting on its obligations and an exit from the Euro zone. According to them, “Nigerian investors with exposure to the Euro zone would have an adverse effect on their portfolios.”