By Chinwendu Obienyi and Chukwuma Umeorah
Nigerian stocks sustained bullish momentum for the third consecutive week as robust interest in diverse stocks across major sectors of the market led to a N6.29 trillion gain in a week marked by general decline in share prices across the global advanced and emerging markets.
Trading data obtained from the Nigerian Exchange Limited (NGX) showed bargain hunting activities across the industrial, insurance, oil and gas, and consumer goods sectors as investors took positions ahead of the 2024 full year earning accompanied by dividend declarations.
Specifically, bargain hunting in Dangote Cement (+53.9 per cent) and BUA Cement (+45.8 per cent) spurred a 13.84 per cent increase in the benchmark index to 94,538.12 points – the highest level on record. Consequently, the Year-to-Date return surged to +26.4 per cent while market capitalisation grew by N6.29 trillion from an opening value of N45.442 trillion to close the week at N51.735 trillion.
From a sectoral standpoint, the industrial goods (+46.9 per cent) index recorded the most significant weekly gain, followed by the Insurance (+14.9 per cent), Oil and Gas (+8.8 per cent) and Consumer Goods (+8.2 per cent) indices. The Banking (-0.1 per cent) index was the sole loser for the week.
The positive performance of Nigerian equities bucked the generally negative performance of the global markets following lacklustre economic (GDP) data from China and growing uncertainty about the prospective timing of rate cuts by the Federal Reserve. In the United States, US equities, the Dow Jones Industrial Average (DJIA: -0.3 per cent; S&P 500: -0.1 per cent) retreated this week after robust US retail sales data cast fresh doubts on the possibility of a Federal Reserve rate cut in March.
Likewise, European equities (STOXX Europe: -1.3 per cent; FTSE 100: -2.2 per cent) continued its losing streak for the third consecutive week on growing concerns that major central banks, particularly the Federal Reserve, will agree to early interest rate cuts amid sticky inflation.
Elsewhere, mixed sentiments prevailed in Asian markets (Nikkei 225: +1.1 per cent; SSE: -1.7 per cent) as Japan’s slowing inflation and hopes of a switch to an accommodative monetary policy stance drove the Japanese market higher.
Conversely, the Chinese market sustained its third consecutive weekly loss as investors expressed concerns about China’s bleak economic outlook fueled by disappointing economic reports and indications that authorities would refrain from implementing substantial stimulus measures to spur growth. Lastly, the Emerging (MSCI EM: -3.5 per cent) market mirrored the downtrend across major global stocks following losses in China (-1.7 per cent) and India (-1.2 per cent). On the other hand, the Frontier (MSCI FM: +0.2 per cent) market stayed in the positive territory, buoyed by bullish sentiments in Vietnam (+2.0 per cent).
Meanwhile, a total turnover of 5.179 billion shares worth N77.797 billion in 79,012 deals was traded by investors on the NGX trading floor, in contrast to a total of 5.719 billion shares valued at N88.828 billion that exchanged hands last week in 80,064 deals.
The Financial Services Industry (measured by volume) led the activity chart with 3.191 billion shares valued at N33.413 billion traded in 36,276 deals; thus contributing 61.60 per cent and 42.95 per cent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 473.638 million shares worth N8.185 billion in 6,325 deals while the Consumer Goods Industry recorded a turnover of 460.149 million shares worth N17.484 billion in 12,550 deals.
Trading in the top three equities namely Transnational Corporation Plc, Jaiz Bank Plc and AIICO Insurance Plc (measured by volume) accounted for 1.093 billion shares worth N9.501 billion in 10,047 deals, contributing 21.09 per cent and 12.21 per cent to the total equity turnover volume and value respectively.
Despite the positive sentiments pervading the market, market operators who spoke to Daily Sun, argued the increased liquidity as well as buying interest has been driving factor behind the gain in Nigeria’s stock market.
“If you notice, the volumes of trade are also getting higher by the day. The average volume in the market before the rally was around 300 million units per day. At the onset of the rally last year, it moved to about 500 million units but now, we are seeing close to 1 billion per day. However, what is still driving the market is sentiment and nothing more than sentiments”, Vice-Chairman, Board of Highcap Securities, David Adonri, explained.
He further suggested that a potential reversal in the positive trend would not be solely driven by profit-taking but rather be influenced by shifts in government policies or information emanating from individual companies as the market is inherently information-driven.
“The market is very tough to predict, there is no guarantee that the upward trend would be constant as a little shift maybe in government policy can quickly reverse its direction. Anything can happen at any time”, he said.