Equities trading activities on the floor of the Nigerian Stock Exchange (NSE) finished the 10 months of the year on the positive trajectory with a record of N3.448 trillion.
Also, investors gained N44 billion from their investments in stocks for the month of October. Market players, while being optimistic, have described the market performance as impressive, given that the year commenced on the negative record of 2016.
It will be recalled that the market initially ran bearish at the beginning of the year before the bulls eventually dominated activities on the nation’s bourse toward the beginning of second quarter.
While activities in first quarter ended negative with a loss of 5.05 per cent, investors’ confidence returned in second quarter to close with a gain of 29.79 per cent, while the third quarter recorded a return on equities of 7.01 per cent.
Analysts have ascribed the growth recorded within the period to factors such as the initiatives taken by the Central Bank of Nigeria (CBN) to solve the problem of chronic scarcity of foreign exchange (forex).
Trading activities from January to October revealed that the All- Share Index gained 9,805.67 basis points or 36.49 per cent to close at 36,680.29 index points on October 31, 2017 as against 26,874.62 at which it opened for the year. Similarly, market capitalisation of equities appreciated by N3.448 trillion to close at N12.695 trillion compared to N9.247 trillion.
Reviewing the year-to-date as at October 31, of sectoral indices showed that except for NSE Oil and Gas and NSE Alternative Securities Market (ASeM), all other indices closed positive.
NSE Banking lead with a gain of 69 per cent, NSE 30 followed with a gain of 40.19 per cent, NSE Consumer Goods appreciated by 28.92 per cent, while NSE Industrial Goods up by 27.16 per cent.
NSE Lotus II, and NSE Insurance rose by 25.07 per cent and 10.10 per cent respectively. On the other hand, NSE Oil and Gas declined by 8.80 per cent, while NSE-ASeM depreciated by 2.29 per cent.
Capital market analysts attributed the impressive performance to better-than-expected quarterly earnings, the establishment of the I&E FX Window was most significant for the equities market, as it addressed the concerns of foreign portfolio investors around the country’s currency outlook and the report of Pension Commission approved the implementation of the multi-fund structure, having the potential to significantly increase local pension funds’ exposure to equities by Pension Funds Administrators (PFAs) for RSA funds, contributed immensely to equities rally.
On the macro front, they noted that the signals of an improving macro economy with Nigeria’s exit from recession with its second quarter GDP growth of 0.55 per cent after five consecutive quarters of being negative.
Speaking on the stock market performance, the managing director of HighCap Securities Funds Limited, Mr. David Adnori said, “The market has been stable since it recovered from the negative position to positive position from April and it is been on the positive terrain from that point till date.”
He noted that volatility in the market is not very severe, saying that “This indicate that stability is coming to the market and with the impressive nature of most of the third quarter results for example Nestle declaring an interim dividend of N15, this tells us the fundamentals of the market are getting stronger in such a manner that the forecast analysts have predicted, the All-Share Index can hit 40,000 points at the end of the year may still come to pass.”
The chief operating officer of InvestData Limited, Mr. Ambrose Omordion said “As some companies posted positively surprising earnings that offered insights into the transformation activities going within these companies.
These, more or less, also reflected the fact of the larger economy coming farther out of the woods, just as they confirm that the economic fundamentals being portrayed are not just on paper, but real, particularly the Nigeria’s exit from recession with its Q2 GDP growth of 0.55 per cent after five consecutive quarters of being negative.
He pointed out that the CBN reviewed foreign exchange policy which led to intervention and creation of new products has beat expectations in different quarters as the impact of the Investors and exporters window of the forex market continued to reflect on every facet of the economy to drive the recovery in the system.
He added that the continued positive macro-economic data are evidence of growing national output which the recent corporate earnings are also confirming, giving insight of what the Purchasing Managers’ Index (PMI) for the month of October and Q3 GDP will look like, besides confirming the true state of the economy.
Omordion advised that investors should allow numbers to guide their decisions while repositioning for the rest of the year trading activities, especially now that prices of stocks are moving up and down amidst improving company, economic and market fundamentals.
According to him, it is time to combine fundamentals and technical tools to take decision by knowing the support and resistant level to reposition or exit any position. Market is in phases know the cycles in order to manage your trading and investing risk.
The managing director of Dependable Securities Limited, Chinenye Anyanwu said that the stock market has performed impressive, saying that the following factors may drive performance further, the stability in the macroeconomic environment, strong end year results from quoted companies, improved sentiments towards the Nigerian economy, the sustained liquidity in the foreign exchange market, and any unexpected possible change in the MPC policy decision.