Stocks gain N623bn as market defies election week concerns

Some market analysts expectation for a trend reversal in favour of the bears did not manifest in the trading week ended Friday February 24.

In the Nigeria’s election week, buy-side investors and fund managers were rather active, causing the market to rise by 2.13percent week-on-week (WoW).

In recognition that the review trading week was a pivotal one for the Nigerian economy because of the election, analysts at Lagos-based Meristem said, “This period is accompanied by uncertainties in the macroeconomic environment and is further intensified by the existing challenges (fuel scarcity and cash crunch).”

They had expected profit-taking activities in the equities market “as investors shy away from risky assets”.

Though post-election worries were stimulating the bears to resume activities on the Nigerian Exchange Limited (NGX), the market still defied the pressure with a gain of about N623billion.

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The market’s positive return year-to-date (YtD) increased to 7.22 percent. Month-to-Date (MtD), the market has increased by 3.21percent.

“As elections approach, the equity market does not seem to be in any way nervous. There is a possibility that the equity market could be nervous over the coming weeks, but the post-election period coincides with the season for recording and paying full-year dividends.

“If the market does turn out to be nervous over the election period then short-term weakness would provide a buying opportunity a little later on, in our view,” said analysts at Lagos-based Coronation Research in their February 20 note to investors.

In the trading week ended Friday February 24, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation increased from preceding week’s lows of 53,804.46 points and N29.310 trillion respectively to 54,949.21 points and N29.933 trillion.

The preceding week’s brief bearish momentum presented further opportunities for the buy-side investors to increase holdings on fundamentally sound stocks with improved valuation and dividend performance.

Despite slight interest in industrial stocks, investors in the review trading week bought more of consumer goods, banking, and oil & gas stocks.