Equities surged to their highest level this year and reversed the negative overhang at the stock market as major scramble for shares by foreign and domestic investors spurred the equities market to a net capital gain of N881 billion in the past 11 days.
According to Financial Watch, equities closed last week with net capital gain of N677 billion, equivalent to a week-on-week average gain of 7.46 per cent, as the rousing price appreciation that started in the last days of April gathered momentum.
Indications show that:
- Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE), which opened on Thursday April 27, 2017 at N8.865 trillion, rose consecutively for 10 days to N9.825 trillion on Thursday May 11, 2017, representing a net capital gain of N960 billion.
- The market, however, witnessed a tinge of profit-taking last Friday May 12, 2017, dropping the aggregate market value of quoted companies by N79 billion to N9.746 trillion. Thus, the net capital gain for the 11-day period dropped to N881 billion.
- The All Share Index (ASI)- the benchmark index for the Nigerian stock market, also rose consecutively from opening index of 25,620.94 points on Thursday April 27 to 28,423.70 points by last Thursday May 11 and dipped marginally to close at the weekend at 28,192.46 per cent. This represented average gain of 10.04 per cent over the 11-day period.
- Three factors were the main drivers of the rally. These included the steady performance of most quoted companies in 2016 and improvement in first quarter 2017 earnings, renewed interest by foreign investors as foreign exchange crisis eases off and positive macroeconomic outlook.
- Investors in the Nigerian stock market, who had been wriggled under losses, are back in the green. Average year-to-date return reversed from negative to a positive return of 4.90 per cent at the weekend. All sectoral indices showed that investors have generally recovered from losing position to various gains.
- The NSE 30 Index, which tracks the 30 most capitalised stocks at the Exchange, showed year-to-date return of 7.96 per cent. Banking stocks were ahead with year-to-date return of 19.51 per cent, providing positive real return on investment after adjustment for inflation. The NSE Industrial Goods Index has so far this year appreciated by 6.36 per cent. The NSE Oil and Gas Index has returned 3.07 per cent while the NSE Insurance Index and the NSE Consumer Goods Index showed modest year-to-date gain of 0.89 per cent and 0.93 per cent respectively.
With more than four gainers to every loser, the stock market was particularly on the high last week. Aggregate market value of all quoted equities rose from the week’s opening value of N9.069 trillion to close the week at N9.746 trillion. The ASI, which doubles as sovereign equities index for Nigeria, also rallied from the week’s index-on-board of 26,235.63 points to close at the week at 28,192.46 points.
Market analysts at SCM Capital Markets said there was likelihood of a continuation of the profit-taking trend that started at the weekend in the next week as investors seek to lock in recent price gains.
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