The market capitalisation of the Nigerian Exchange Limited appreciated by five per cent during the month of October to result in a gain of N1.707tn for investors.
NGX market cap had closed September at N36.331tn and closed October at N38.038tn while the All-Share Index moved up by 2,854.05 basis points or 4.29 per cent to close the month at 69.236.19.
Activities on the local bourse had been boosted by the listings of Nigeria Infrastructure Debt Fund and the VFD Group in the month of October. VFD listed 190,027,365 units of its stocks on the exchange at N244.88 per unit while NDIF managed by Chapel Hill Denham listed 853,817,692 units at N108.39 per share.
During the month, the market also received news of upcoming rights issues in the securities of Jaiz Bank and FBN Holdings pending the approval of the Securities and Exchange Commission while the NGX reclassified four securities from low to medium cap – FCMB, NEM, EtranZact and Fidson.
In a chat with The PUNCH, market analyst, Olaide Baanu, said that the stock market displayed a robust and optimistic trend in October, particularly with the listings and the positive sentiment of investors, primarily directed toward fundamental stocks, especially those in the banking sector.
“It’s noteworthy that numerous financial institutions reported substantial gross earnings and Profit After Tax during the first half of 2023, and October marked the period when the 9-month earnings reports were released. The performance encouraged investors to strategically position themselves ahead of these reports, which, as it turns out, exceeded expectations, suggesting that investors are now proactively positioning themselves for the upcoming fiscal year 2024 earnings and dividend season,” he said.
For Senior Associate, Investment Brokerage at Parthian Securities Limited, Chinazom Izuora, said the Nigerian equity market was relatively quiet in the month of October with lower volumes and values traded compared to previous months as the market anticipated the release of Q3 performance numbers with the highlights in the month of October being the listing of NIDF and the VFD Group.
“The market began to pick up at the tail end of October as Q3 financials started hitting the market. The Nigerian equity market has been in an uptrend since April on the back of corporate actions this was followed shortly by the buying interest in Transcorp and FBNH, but the market really started rallying after the inauguration of the new administration on the back of policy pronouncement and expectations of how such policies are likely to impact the performance of listed companies. The end of fuel subsidy rallied oil & gas stocks and the liberalisation of FX in the banking and financial services sectors. Movements in highly capitalised stocks such as BUA Foods, Dangote Cement, Airtel Africa and Geregu have also been instrumental in raising the ASI this year.”
Coming to the consumer goods and industrial goods sector, Izuora said the companies haven’t fared as well this year because of the negative impact or cost-push of devaluation and rising oil prices on their operating expenses coupled with expectations of lower consumer demand due to the inflationary pressures and high cost of living.
On the positive market trend, the MD of Arthur Steven Asset Management Limited, Tunde Amolegbe, said that investors showed that they were keen on Federal Government’s plans to stabilise the FX market which “Includes the clearing of existing backlogs and other related measures as well as the expected earnings boost that is expected to accrue to sectors such as the banking industry from heightened interest rate levels as well as FX devaluations.
This is why you will see that on a micro level, that the recent gains have been driven primarily by banking stocks as well as the likes of Airtel which have foreign currency revenues.”
On the market outlook, Izuora said, “The policy direction of the new administration has been received with cautious optimism, however, the lack of proper stakeholder management; timely communication and efficient execution of the policies have left the market sceptical that the outlined objectives will be achieved.
“Nigeria also doesn’t exist in a vacuum so global economic and financial issues such as rising interest rates, rising oil prices and regional tensions between Israel and Palestine, Russia and Ukraine and the possible spillover effects of these also impact the outlook for Nigerian companies. The investing public will be looking for proactive management of these issues by the government in the spirit of stimulating economic growth and ensuring stability in the country. Investors should look out for quality and sustainability in selecting investment instruments in 2024.”
Speaking on the market outlook, Baanu said that he anticipates that active investors will persist in taking positions in companies with strong fundamentals, particularly in the financial sector.
“On the other hand, consumer goods companies experiencing a sell-off due to their significant impairment on FX loss provides a favourable entry point for passive investors seeking long-term opportunities in the market,” he concluded.
