• Wednesday, September 27, 2023
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NSE ASI rose by 0.13% in week marred by protests

Stocks beat fixed income as inflation subdues returns

The benchmark performance indicator of Nigeria’s stock market increased by 0.13percent in the trading week ended Friday, October 23 but marred by agitations.

Nigeria, the largest economy in Africa battles protest against police brutality (#EndSARS), a risk which most stock investors weighed while acquiring the naira asset in ongoing remote trading sessions.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation – increased from a week-open low of 28,659.45 points and N14.979trillion to 28,697.06 points and N14.999trillion respectively.

The market witnessed a mix of bargain hunting activities and profit-taking as investors resorted to a cautious trading approach amidst global and domestic uncertainties.

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With the devastating impact of COVID-19 on countries in Africa like Nigeria, now amplified by social unrest, Lagos-based United Capital research analysts said that economic outcomes in the region “may actually weaken beyond initial projections”.

Equity investors on the Bourse booked about N20billion gain in the review trading week, thanks to consumer goods stocks which helped spur the gains.

The market’s positive return year-to-date (YtD) printed slightly higher at +6.91 percent, helped by rally in the month of October alone as the market has increased by +6.93 percent month-to-date (MtD).

“With investors cherry-picking attractive counters across sectors, the ASI maintained its positive performance while neutralizing the effect of declines in the Insurance sector, as local institutional investors continue to take a position in the market”, analysts at Lagos-based Vetiva Securities said in their recent note.

With a number of bellwether stocks expected to release their third quarter (Q3) 2020 results into the market in the new week, the analysts expect the market to be largely directed by the expected earnings results.

“We also believe the unattractive yields in the fixed income (FI) market will continue to redirect funds into the equities market. However, due to the persistent uncertainties in the global and domestic space, a cautious trading strategy is still recommended in the short term”, the analysts added.