Equities Market Gains N3.5tn in 10 Months


Goddy Egene

The Nigerian equities market gained N3.439trillion in 10 months from January to October 2017 as the market heads to record its first positive close after three years of decline.

After closing negatively in 2014, 2015 and 2016, the market has been projected to recover and close 2017 bullishly. In line with the positive projection, the market has maintained a positive trajectory. THISDAY checks showed that the market has garnered N3.439 trillion in market capitalisation, which rose from N9.256 trillion at the beginning of the year to N12.695 trillion at the end of October.

In the month of October alone, the market gained N479 billion with the capitalisation growing from N12.216 trillion. On the average, the market has recorded a monthly growth of N344 billion since the beginning of the year.

Although there was optimism that the market would perform better this year, the market was bearish from January to third week of April on weak investors’ sentiments due to economic recession and foreign exchange risk. However, the Nigerian bourse turned the corner after the Central Bank of Nigeria (CBN) introduced new foreign exchange window for investors and exporters (I&E), which triggered gradual return of foreign investors.

This development, which impacted companies’ financial results for half year and nine months results have continued to sustain that positive growth till the end of October.

Looking at the market performance for the month of October, analysts at Cordros Capital Limited said the equities market closed higher for the first time in three months.

According to them, stocks prices rallied principally on the back of the broadly impressive July-September earnings, which motivated appetite for risk.

“While most companies reported mixed performance in the Q3-17 earnings, the performance for nine months (9M) was well above the level in the same period in 2016. For manufacturing companies, both revenue and profit before tax (PBT) recorded significant growth compared to the same period last year. For the banking sector, 9M-17 results were broadly impressive, as the strong gains on their portfolio of government securities (treasury bills, placements and bonds), the repricing of risk assets, and foreign exchange trading gains supported gross earnings, with a trickling down effect on both PBT and profit after tax (PAT),” they said.

The analysts disclosed that the number of companies that recorded m/m losses reduced to 30 (vs. 35 in September) while gainers fell to 49 (vs. 64 the previous month).

“The shares of some of the companies from the above mentioned sectors that impressed with 9M-17 results featured on the top gainers’ list, and here, we make particular reference to International Breweries (32.41 per cent), Flour Mills of Nigeria Plc (18.64 per cent), Cement Company of Northern Nigeria PlcCNN (16.03 per cent), Dangote Cement Plc (5.17 per cent), UBA (11.11 per cent), and FBN Holdings (9.93 per cent),” they said.

The Chief Exchange Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema was one of those who have been very confident that the market would recover at the end of the year.

According to Onyema, the capital market is a subsector of the Nigerian economy and the World Bank had projected that the economy would recover from its recession this year with a modest growth of 0.6 per cent.
He therefore said based on the positive forecast and the initiatives being put in place by the NSE, investors should be optimism about recovery of the market in 2017.

The NSE boss had noted that the Nigerian capital market would have to do a better job at promoting its unique value proposition to both global and domestic investors.

“We expect investors to continue to keep a close eye on the divergence between the interbank FX rate and other exchange rates in the country. Accordingly, a convergence of FX rates in the country and the performance of listed corporates will determine the level of market activity in the short term,” Onyema said.