Stocks push global slump with N1.17tn gain in one week

Nigerian scholarship


Nigerian stocks closed the weekend with net capital gains of 1.17 trillion naira, playing against the grain in a week that saw most global markets post significant losses.

Stock market benchmarks showed an average return of 4.25% last week, equating to net capital gains of 1.166 trillion naira. Last week’s rally, the fifth consecutive positive week, lifted Nigeria’s year-to-date average for listed stocks to 24.30%.

The aggregate market value of all listed on the Nigerian Exchange Limited (NGX) closed the weekend at N28.626 trillion compared to the week’s opening value of N27.460 trillion, an increase of N1.166 trillion. naira. The All Share Index (ASI) – the common value-based index that tracks all stock prices on the NGX, fell from its opening index for the week to 50,935.03 points to close the week. -end at 53,098.46 points.

The ongoing bullish rally in the stock market countered the general negative sentiment in global markets. In the United States (US), the Dow Jones Industrial Average (DJIA) depreciated 3.6% while the S&P 500 index fell 4.7%. The UK’s FTSE 100 index posted an average loss of 0.9%.

Europe’s broad tracker – STOXX Europe, fell 0.4%. The Japanese Nikkei 225 index marked the Asian markets with an average loss of 2.1%. The MSCI EM index, which tracks global emerging markets, fell 4.2%, while its sister index, the MSCI FM index, which tracks frontier markets, posted an average loss of 5.0. %.

Analysis of price trends in the Nigerian stock market showed that the overall market performance was driven by a widespread appetite for Nigerian stocks across all sectors. The NGX 30 Index, which tracks the 30 largest stocks, posted an above-average gain of 5.72%. Oil and gas stocks led the rally with an average gain of 6.94%. The NGX consumer goods index followed with an average return of 5.38%. The NGX Industrials Index rose 2.33%, while the NGX Banking Services Index rose 0.04%. The NGX Pension Index, which tracks specially selected stocks in accordance with pension fund investment guidelines, rose 4.08%. The market’s leading ethical index, the NGX Lotus Islamic Index, which tracks stocks that comply with Islamic rules on investments, posted an above-average return of 7.14%.

With 50 winners and 32 losers, several stocks hit their all-time highs over the weekend. In percentage terms, McNichols posted the highest gain of 59.52% to close at 1.34 naira per share. Royal Exchange followed with a gain of 51.49% to close at 1.53 naira per share. Champion Breweries rose 30.84% ​​to close at 4.37 naira. International Breweries followed with a gain of 30.37% to close at N8.80, while Okomu Oil Palm rebounded 26.47% to close at N215 per share.

On the negative side, Academy Press led the losers with a decline of 13.71% to close at N1.51. Ikeja Hotel followed with a loss of 10.94% to close at N1.14. Guinness Nigeria fell 10.91% to close at N98. Tripple Gee and Company fell 9.38% to close at 87 kobo while Caverton Offshore Support Group fell 9.09% to close at N1.20 per share.

Business momentum has also improved significantly with total turnover of 1.816 billion shares worth N27.194 billion in 36,286 trades last week compared to 1.598 billion shares worth of 19.603 billion naira traded in 21,494 transactions two weeks ago.

The sector breakdown indicated that the financial services sector led by banks remained the most active with 904.860 million shares valued at 8.498 billion naira in 12,883 transactions, accounting for 49.82% and 31.25% of volume respectively. and the total turnover value of the shares. The conglomerate sector ranked second with 263.830 million shares worth N540.313 million in 1,651 deals, while the consumer goods sector ranked third with turnover of N238.964 million. shares worth N5.816 billion in 7,635 transactions.

The three most active stocks were Transnational Corporation of Nigeria, Guaranty Trust Holding Company and Jaiz Bank. The three most active stocks accounted for 459.179 million shares worth N3.294 billion in 3,645 trades, accounting for 25.28% and 12.11% of total trading volume and value respectively. shares.

Analysts at Cordros Securities said they expect price gains to moderate as investors seek to secure profits from the five-week bull run in the market.

“Thus, we see more of a ‘choppy theme’ as cautious trading takes center stage ahead of the Monetary Policy Committee (MPC) meeting scheduled for later in the month. Nonetheless, we advise investors to only take positions than in equities are fundamentally warranted as the weakness in the macro story remains a significant headwind for corporate earnings,” Cordros Securities said in a weekend note to investors.

Meanwhile, in their latest review of Nigerian stocks, analysts at FSDH Securities said Nigerian stocks still have room for upside, especially among fast-moving consumer goods (FMCG) companies which have finally been able to pass on more cost increases to consumers.

In the report titled ‘FSDH Top Pick’, analysts said they remained bullish on upstream oil and gas companies and palm oil companies, following Indonesia’s decision to ban oil exports. palm olein, which is expected to trigger a surge in palm oil prices.

“It is clear that the pattern of equity market activity has changed as domestic institutional investors are now taking larger bets on Nigerian equities following expectations of prolonged bearish sentiment in the bond market.

“This narrative is likely to continue for an extended period as bond yields are expected to continue their upward trend, prompting institutional investors to increase equity allocations, particularly as new funds flow into the market. However , we advise investors to be patient and wait for the recent rally to subside before taking a position in the market, as the market is overloaded in the short term,” the FSDH said.

The report picked out 10 stocks that are likely to generate above-average returns for investors. These include Unilever Nigeria, Lafarge Africa, Nigerian Breweries, International Breweries, Seplat Energies, Flour Mills of Nigeria, Transnational Corporation of Nigeria, Ecobank Transnational Incorporated, MTN Nigeria Communications and Okomu Oil Palm.

The report notes that the Nigerian stock market extended its stellar performance from 2022 into April as investors were in a bullish mood, taking aggressive positions in the stock market, particularly with a focus on asset names. consumption as well as on palm oil companies.

According to the report, the improvement in sentiment was initially triggered by dividend reinvestment activity by investors, but was further boosted by the strong first quarter 2022 earnings season.

The report pointed out that impressive exits from companies like Okomu, Guinness Nigeria, Nigerian Breweries, Unilever Nigeria and Lafarge Africa, among others, sparked a buying frenzy as investor interest hit a new level.

Overall, the benchmark All Share Index (ASI) gained 5.7% in April to close the month at 49,638.94 points. The rally in the Nigerian stock market was broad-based, with all major sectors closing higher. The rally was led by the oil and gas sector with an average gain of 19.1% in April 2022.

Also Read: Nigerian Stock Investors Made N262 Billion Naira Over the Holidays

The report noted that the rally in oil and gas stocks reflected bullish sentiments in the crude oil market, particularly for Seplat Energies, which was also due to pay a quarterly dividend. Additionally, Oando’s announcement of a board meeting sparked a buying spree on the stock.

The report pointed out that a strong outflow from FMCG stocks during the first quarter 2022 earnings season supported the performance of the consumer goods sector which gained 11.5% in April 2022.

Meanwhile, the global equity market started the second quarter of 2022 on a bearish note as fears of a spike in interest rates underpinned risk sentiments towards equities. This was broadly in line with FSDH’s outlook for April, with only one of the stock indices tracked in the US and European stock markets closing north in April.

“As May approaches, we continue to advise investors to underweight exposure to equities from developed economies. This is based on expectations of further decline in US and European markets. Following the FOMC’s decision to raise interest rates an additional 50 basis points, the largest since 2000, we expect investors to remain on their toes as they anticipate further rate hikes for the rest of the year,” the FSDH said.

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