Stocks listed on the Nigerian Stock Exchange recorded their best performance in eight weeks Tuesday after President Muhammadu Buhari transmitted his list of ministerial nominees to the Senate for approval.
The benchmark index of the NSE, the All-Share Index, rose 1.21 percent to close at 28,144.87 points, the biggest daily gain recorded at the local bourse since May 28, a day before President Buhari was sworn into office for a second four-year term.
“The positive performance in the market could be attributed to the list of ministers released by the government,” Charles Fakrogha, stockbroker at the NSE and head of investment banking at CityCode Trust Ltd, told BusinessDay. “The list could have interested more investors” who have waited for a policy direction since Buhari was inaugurated more than 55 days ago.
However, managing director, Afrinvest Securities Limited, Ayodeji Ebo pointed out that the ministerial list could not have triggered the positive sentiment witnessed in the market.
“If the investors were reacting, the market should go down,” Ebo said. “Investors were just buying, it is not sustainable.”
While investors were waiting for companies to release their results for the half-year 2019 and a policy direction from the government for Buhari’s second term, Nigerian stocks had plunged to the lowest level in more than two years while investors, creating bargain opportunities in fundamentally sound stocks.
Checks by BusinessDay revealed the bullish performance was driven by large-cap stocks, particularly Dangote Cement which rose 2.3 percent to N174; Nestle Nigeria, 5.3 percent to N1,327; and Lafarge Africa, 9.9 percent to N14.40. This lessened the loss in the market since the start of the year to 10.5 percent.
Out of these three companies, Dangote Cement and Nestle Nigeria, which made a significant contribution to the increase, contributed were yet to release their half-year results as at the time of filing this report.
“I would not say it’s the earnings session because a lot of companies have not released their results,” said Fola Abimbola, equity research analyst at FBN Quest. “It’s more likely to be the ministerial list.”
Despite the gain, analysts at Afrinvest said they expect bearish performance to dominate activities in the market, even though “we see opportunity for bargain hunting.”
OLUWASEGUN OLAKOYENIKAN
