After slipping from a positive year to date performance in mid-march, the Nigerian Stock Exchange (NSE) has shown signs of a rebound as it extends daily gaining streak to the sixth consecutive day with year’s return now in the positive region.
The Nigerian Stock Exchange on Thursday returned to a positive YTD territory after gaining 1.07 percent driven by strong performance by the most capitalised stocks, Dangote Cement and MTN Nigeria.
The two stocks have dominated market activities in the week following the listing by introduction of MTN, as demand for the telecoms company’s stock pushed its price and market cap.
Since MTN began trading on May 16, scarcity of the stock and the high demand for it pushed its price to rise to N149 at Thursday’s close in Lagos, or 65.56 percent increase from a listing price of N90.
Some investors, who were unable to buy MTN shares, moved their orders to Dangote Cement, thereby pushing its price up as well by 16.48 percent, from N176 to N205 in four days.
“The on-going competition between MTN Nigeria and Dangote Cement to be the most capitalised stock is positive for the market but once the euphoria around MTN starts to settle down, the market might slow,” Yinka Ademuwagun, an equity analyst at United Capital said.
MTN Nigeria gained 2.87 percent Thursday and joined Dangote Cement as the only stocks with three trillion naira valuation. This is so far the weakest daily gain for MTN Nigeria which has averaged more than 9 percent daily gains although liquidity of the stock improved as supply rose in the day.
“Given the strong institutional demand, there is room for an increase in the price MTN Nigeria shares although movement in price going forward would be a bit measured,” Wale Okurinboye, head of research, Sigma Pensions, noted.
For the market, Ademuwagun explained that until there is a broad-based price movement, it cannot be said that the sentiment has improved.
He called for the implementation of policies that would serve as a catalyst for private sector growth.
“ Until we see policy changes like tariff reform, petrol subsidy removal, harmonisation of foreign exchange, the market would not gain as much as it has in the last one week when the euphoria round MTN dies,” he said.
SEGUN ADAMS
