Investors Stake N124bn on Shares, Gain N2.7tn in December

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By Goddy Egene

Investors staked N124.724 billion on 9.979 billion shares in 94,857 deals on the last month of 2020 as the market rode to a positive close, compared to a negative close of the previous year. The market was highly bullish in December with the Nigerian Stock Exchange (NSE) All-Share Index(ASI) gaining 14.8 per cent, while market capitalisation added N2.741 trillion.

The index gain in December accounted for 29.6 per cent of the total growth recorded of 50 per cent recorded for the whole year. Also, the N2.741 trillion gain in the capitalisation is about 34 per cent of total N8.1 trillion recorded in the year.

However, the high performance posted in the month did not come as a surprise as analysts at InvestData Consulting had linked it to Santa Clause rally and the end-of-year window dressing by investors.

According to them, there have been positive sentiments for value, growth and highly capitalised stocks with attractive valuation, as investors reposition for year-end seasonal trends and the much expected economic recovery in 2021.

“The bull run shows that smart money is still in the market. The ongoing Santa Claus rally is attributed to window dressing for year-end among institutional investors, even as bonuses are entering the market ahead of the New Year, as some investors are taking advantage of the tax code by selling positions they have taken losses at the end of December to buy-back in January,” InvestData said.

They noted that the news of the federal government ordering the reopening of the nation’s borders is expected to add more momentum to factors driving the equity prices, going forward.

“Such factors, including the high liquidity in the system, low yields environment in the fixed income market, uptrend in oil price, the discovery of a vaccine for Covid-19, and the expected early passage of the 2021 budget have supported the positive sentiment in the market so far,” InvestDat said.

The Chief Executive Officer of Sofunix Investment and Communications Limited, Mr. Sola Oni, had said investors would naturally opt for where they can generate optimal profit as low yields in the fixed income securities persisted.

“At the moment, equities are about the major option that can meet investment objectives of many discerning investors. Our stock market is forward looking. Investors have realised that third quarter (Q3) results of many companies have signaled better performance for the year end results which will begin to roll in as from early 2021,” he said.