Nigeria’s equities trading data for the month of January show that a record +5.32percent rally or N1.13trillion gain in the review month was driven largely by bargains in major counters.
Unattractive fixed income (FI) yields, improved system liquidity and drought of investment alternatives are factors that sustained stock market positive performance.
Top on the list of outperforming stocks in terms of their returns (over 30percent) in January are Champion Breweries (+261.6percent), Livestock Feeds (+85.6percent), Linkage Assurance (+73.1percent), NCR (+59.2percent), Mutual Benefit (+59.3percent), BOC Gas (+58percent), Ardova (+40.2percent), CHI Plc (+37.5percent), Fidson (+34.4percent), and Flour Mills (+33.5percent).
Other stocks that yielded over 30 percent return in January are: Japaul Gold (+46.8percent), AXA Mansard (+33.3percent), May & Baker (+32.5percent), NEM Insurance (+35.2percent), NNFM (+43.6percent), Portland Paint (+42.3percent), Regency Alliance (+54.5percent), Royal Exchange (+53.8percent), Sovereign Trust (+30percent), Trans Express (+37.5percent), Lafarge Africa (+42.5percent), and Wapic Insurance (+35percent).
This implies that investors in these got large chunk of the over N1trillion capital gain recorded in January.
As major bellwether stocks (stocks believed to be leading indicators of the direction of the economy or of a sector of the market or the market as a whole) are expected to announce their earnings results in the coming month, it is expected that the Nigerian Bourse will be largely directed by the outcome of these results as they are being released into the market.
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The equity market of Africa’s largest economy had in the review month witnessed impressive run amidst sustained bargain hunting activities by a number of savvy investors. The equity market was largely dominated by the bulls, leading to a positive close across all sectoral indices.
For instance, the NSE-30 which tracks the performance of the thirty (30) most capitalised stocks on the Bourse increased by +4.93percent in January while the NSE Banking increased by +7.89percent.
Other sectoral performances are: NSE Consumer Good (+7.04 percent); NSE Industrial (+1.41 percent); NSE Insurance (+29.77percent) and NSE Oil & Gas (+12.43percent). The stock market opened the year 2021 with All Share Index (ASI) at 40,270.72 points and listed stocks’ value at N21.057 trillion.
At the close of trading session on Friday January 29 being the last trading day in January 2021, the ASI increased to 42,412.66 points while the value of listed stocks advanced to N22.186 trillion.
In a move to support economic recovery, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at the end of its two-day meeting last week decided to keep all policy parameters unchanged.
In the absence of any negative events capable of adversely affecting investors’ confidence, the equities market still looks good to continue its rally this February as recent “Hold” decision by MPC strengthens interest in value stocks.
In addition, the direction of full year 2020 corporate releases will help drive the performance of the market. Already in their optimistic mood, some analysts maintain their bullish outlook for the quarter.
In their outlook for the week ending February 5, research analysts at GTI said that as the investing public continue to await more earnings’ results and the quest for better dividend returns from companies with high dividend yield history, they expect more bargain-hunting in the new week.
Also, Meristem analysts in their February 1 note to investors said they expect that the hunt for dividend paying stocks will drive market performance this week.
“Although earnings performance so far has been mixed, we see scope for dividend payment on resilient counters. Overall, we expect the market to close positive”, they added.
“We expect the market to sustain the momentum as investor sentiment remains positive, despite the rapid rise in market interest rates” according to Guy Czartoryski-led Coronation Research analysts.
