Nigerian equities gained the most in a day on Monday in almost three years, driven by gains in two banks, consumer goods, and oil and gas companies.
The All-Share Index gained 3.88 percent to 31,967.01 points at the close of trading in Lagos, cutting the year-to-date loss of the Nigerian Stock Exchange (NSE) to -16.41 percent.
Dangote Sugar, Stanbic IBTC, Diamond Bank and Nestle gained the daily maximum increase of 10 percent each to N15.40, N50.60, N1.65 and N1,617.10, respectively. Seplat, an oil and gas company that is also listed on the London Stock Exchange, gained 9.99 percent to close at N642.90.
Diamond Bank gained a seventh day following the announcement last week of a planned merger with Access Bank. The merger is expected to produce Nigeria’s and Africa’s largest retail bank by customers.
Performance of the local bourse has been challenged by concerns over Nigeria’s general elections scheduled for early 2019, exit of foreign investors to take advantage of higher returns in the United States and other countries. These have combined to weigh down on prices of stocks listed on the exchange.
Today’s rally “can be likened to portfolio rebalancing by institutional investors,” Ayodele Ebo, Managing Director of Afrinvest Securities Limited told Businessday. “Most times, fund managers that have been heavy in other asset classes will try to rebalance their portfolios to align with their targets.”
The rally also came as billionaire Femi Otedola announced his intention to fully divest from Forte Oil, where he is the majority shareholder. Forte Oil said in a statement sent to the NSE that Otedola would sell all his 75 percent direct and indirect shareholding in the downstream business of the oil and gas company.
Forte Oil gained 9.84 percent to rise to N31.25, the highest in nearly six months.
All major sector indices also closed higher. NSE Oil & Gas rose by 5.7 percent; the Insurance 1.0 percent; Consumer Goods 5.5 percent, Industrial Goods, 2.6 percent; while Banking gained 1.4 percent.
“We expect market performance to be positive in subsequent sessions till year-end, largely driven by portfolio rebalancing,” analysts at Lagos-based Afrinvest said in a note to clients today.
