For the first time in 2019, the Nigerian equity market closed in the positive territory year to date, following bargain hunting in some stocks particularly banking stocks ahead of the post election rally and earnings season. The All Share Index(ASI) ended the week at 31,529.92 points as against 31,430.50 points on the last trading day of 2018, translating to a gain of 0.32 percent.
Similarly, the market capitalisation of listed stocks closed at N11.76 trillion last Friday in contrast to N11.72 trillion on 31 December 2018. This implies that equities listed on the NSE gained N37.3 billion.
Banking stocks are mostly responsible for the positive sentiment on the Nigerian bourse, as the NSE Banking Index appreciated by 7.46 percent year to date , emerging as the most improved sectoral index. The NSE Industrial Index and NSE Main Board Index closed year to date at 1.95 percent and 1.79 percent, trailing the banking index in performance.
Analysts hold divergent views as to whether the nation’s capital market is total out of the woods. This is because with most of the listed stocks having their year-end by December, stakeholders at the are expectant that few weeks from now, notable companies will begging to announce their audited results, and taking a position while valuation is cheap is the most appropriate action.
“We are not exactly out of the woods. It is more reflective of investors taking advantage of cheap valuations ahead of expected rally after the general elections”, Kemi Akinde, senior analyst with Meristem Securities said.
Ten banking stocks made it on the year to date’s gainers’ table year to date. Sterling Bank which closed at 31.6 percent year to date, led the pack ad is closely followed by Fidelity Bank, 20.7 percent; FCMB, 16.9 percent; Wema Bank, 12.7 percent; GTB, 12.2 percent; Union Bank, 11.6 percent; Diamond Bank, 7.8 percent; Jaiz Bank, 6 percent; Zenith Bank, 5.9 percent and First Bank Holding, 0.6 percent.
Others hinged their optimistic views of the market on the likely implementation of the minimum wage which will have a trickle down effects on consumer goods and hence the capital market.
“Heading into 2019, amid the recovery in the broader economy, we opine that the possibility of minimum wage implementation could have a pass-through effect on consumer spending on staple foods. Furthermore, the relative availability of FX will continue to bode well for input costs while aggressive spending on marketing and selling costs could drive sales volume amid improving product mix”, United Capital analysts said in a note to clients.
In the week that just ended, investors traded 1.89 billion shares worth N26.88 billion in 19,213 deals as against 1.452 billion shares worth N19.72 billion in 12, 581 deals traded in the previous week. The financial services industry accounted for 79 percent of the market volume and 73 percent of the market value. The consumer goods and conglomerates were second and third when measured by the level of patronage.
TELIAT SULE
