With six more weeks to the end of the year, renewed interest in the Nigerian equities has made more listed stocks appreciate in value, leading to a gain of N261.5 billion in market capitalisation in just five trading days.
The extent of the renewed interest in the Nigerian equities is measured by the number of equities that appreciated year to date, the percentage gain in each stock and the value of transactions executed by the top ten brokers on the Nigerian Stock Exchange (NSE).
There are noticeable improvements in the market statistics between November 1 and November 15, 2019 as against the weeks before.
In the week that ended November 1, 2019, the top ten brokers on the NSE executed N24.5 billion worth of transactions, representing 75.5 percent of the entire market value. On November 8, 2019, the top ten brokers executed N26.7 billion worth of transactions, which amounted to 72.4 percent of that weekly value. Last week Friday, that is, November 15, 2019, the top ten brokers traded N55.12 billion worth of transactions representing 81.3 percent of market value. This implies that between November 1 and 15, the value of weekly transactions of the top ten brokers rose by 125 percent.
Progress was also recorded in the number of stocks that appreciated year to date. At the close of transactions on the NSE last week Friday, 25 stocks ended in the positive territory, with C & I Leasing and Cornerstone Insurance the most gained stocks at 270.8 percent and 210 percent respectively. Other top-performing stocks are ABC Transport, 55.2 percent; Access Bank, 54.4 percent; Jaiz Bank, 42.0 percent; Caverton Offshore, 40.6 percent and Chams, 35 percent.
“The moderation in yield environment, as reflected in notable tightening of the sovereign yield curve is gradually stimulating investor appetite for equities, particularly as dividend yield on some stocks are higher than the yield of some fixed income instruments. Hence, cash allocation to equities is improving as investors seek higher risk-adjusted return opportunities in stocks, which offer notable upsides at current historic-low valuations” said Rasak Abiola, head, corporate strategy, Central Securities Clearing Systems (CSCS).
Compared with the week that ended on November 8, 2019, nineteen listed stocks appreciated in value, with C & I Leasing and Cornerstone Insurance still the best performing stocks but while the former appreciated by 270.8 percent and the latter gained by 145.0 percent year to date.
Next was ABC Transport Services which gained by 55.2 percent. MTN Nigeria at 35.6 percent; Access Bank at 35.3 percent and Trans Nationwide Express at 30.8 percent were the most appreciated stocks in the week that ended November 8, 2019.
Analysts have attributed the current market sentiment to a number of factors particularly the development in the money market. The recent Central Bank of Nigeria’s decision as to the effect that certain players would not be allowed in the OMO segment has made the affected players look for opportunities elsewhere and the capital market is now emerging as the greatest beneficiary.
“The equities market continued to trade higher, albeit marginally, led by gains recorded in consumer goods, industrial and oil & gas sectors, offset by negative performance in the insurance and banking sectors. The market is expected to remain volatile in the near term, and we advise investors to buy quality stocks with a long term investment horizon”, FSDH Research stated.
“Fundamentally the rally is sustainable and only justifies the positive outlook on market recovery in 2020. Albeit, the depth, and sustainability of the rally may be vulnerable to changes in policy decisions on both the fiscal and monetary sides”, Abiola added.