The equities market continued to sustain its positive performance, gaining N330 billion in August compared to N113 billion recorded in the previous month.
Having opened the second half (H2) of the year with a growth of 0.8 per cent in July, the stock market witnessed a better performance in August with the Nigerian Stock Exchange (NSE) All-Share Index (ASI), rising by 2.56 per cent to close at 25,327.13 while market capitalisation added N330 billion.
The NSE ASI rose from 24,693.73 to close at 25,327.13 while market capitalisation rose from N12.882 trillion to N13.212 trillion.
Low prices of stocks and expectations for half (H1) year corporate results had attracted more investors to the market in July, which led to the positive start of the H2 of 2020.
In August, the anticipation for the full opening of the economy improved quarterly results of companies and dividends payment by some companies helped to sustain the bullish trend; hence, a growth of 2.56 per cent in one month and a reduction of the year-to-date decline to 5.6 per cent.
Commenting on the performance of the market, the Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu, attributed the gains to the gradual easing of the lockdown, the gradual retuning of active economic agents and the fact that some of the results of quoted companies for the second quarter (Q2) were positive.
“The various cash injections following the COVID-19 palliative by governments and donor agencies helped to give impetus to the economy and by extension and vigour to the capital market. With the reintroduction of FX window options by the Central Bank of Nigeria (CBN), it is expected that the market will continue in its recovery trajectory,” Ezeagu said.
A leading market operator and Group Managing Director of Emerging Africa Capital Group, Mrs. Oluwatoyin Sanni, also said the interest shown by investors was partly because most of them began to anticipate the full opening of the economy signalled by gradual reopening over the last few weeks as well as the downward trend in COVID-19 statistics.
“In August, investors expressed their interest in defensive and growth stocks with strong potential for future growth, irrespective of the economic slowdown. In particular, demand for manufacturing and banking stocks helped the benchmark ASI to close higher. The positive momentum and sentiment towards companies that pay interim dividends and repositioning in the consumer and industrial goods segments kept the market on an upward,” she said.
Sanni added that the strength of the quarterly earnings report of many small companies that showed promises attracted some investors as well, thereby influencing the growth recorded in the month under review.
The Head of Research at United Capital Plc, Mr. Wale Olusi, said the Nigerian equity market sustained the bullish trend in August as investors continue to cherry-pick on oversold stocks amid a sustained decline in the yield environment.
“Despite uncertainties in the horizon, the uptrend in the market is driven by cheap market valuation, especially in the oil and gas and expectations for the yet-to-be-released results of tier 1 banks as investors’ position ahead of interim dividend payment. Lastly, sustained reduction in yields on treasury bills, which continues to approach one per cent, account for the interest in the stock market as investors opt for riskier assets to make alpha returns,” he said.
According to him, sectoral analysis showed that four out of five sectors’ indices under United Capital Plc’s coverage closed the month in the green territory.
“The NSE Oil and Gas sector index led the gainers’ campaign, rising by 10 per cent, followed by the NSE Insurance sector index that appreciated by 8.2 per cent. The NSE Consumer Goods index gained 6.1 per cent, while NSE Banking index rose 5.5 per cent. On the flip side, the NSE Industrial Goods sector was the month’s sole loser, shedding 2.4 per cent,” Olusi stated.
For individual stocks, the top price gainers in August were led by University Press Plc with 48.6 per cent. FTN Cocoa Process Plc followed with 30 per cent just as LASACO Assurance Plc and AXA Mansard Plc chalked up 29.1 per cent and 27.7 per cent respectively.
Other top price gainers included: Seplat Petroleum Development Company Plc ( 24.1 per cent); Unilever Nigeria Plc (22.5 per cent); Stanbic IBTC Holdings Plc (20.2 per cent); Nigerian Breweries Plc (19.4 per cent); Fidson Healthcare Plc (17.8 per cent); Cadbury Nigeria Plc (17.4 per cent) and FCMB Group Plc (15.2 per cent).