Banking sector emerges best stocks with N1.045bn increase
Trading activities on the floor of the Nigerian Stock Exchange (NSE) ended the 2017 financial year on the positive trajectory with a record of N4.363 trillion gain to close at N13.609 trillion in market capitalisation.
The growth in market capitalization during the last 11 months was mainly due to sustainable positive sentiment by investors following impressive half-year financial performance.
Available statistics to New Telegraph showed that activities on the Nigerian Stock Exchange which opened the trading year at N9.246 trillion in market capitalisation and 26.874.62 in index at the beginning of trading on January 2, 2017, closed the year on December 29, 2017 at N13.609 trillion and 38,243.19 index points.
As a result, the stock market earned a year to date gain of about N4.363 trillion or +42.30 percent year to date.
The stock market, which was hard hit by the drop in the crude oil price and exit of foreign investors, began to show some signs of positive outlook and recovery during the second quarter as the gain, which was unprecedented, pushed up the All Share Index’s Year-to-Date (YTD) returns to +42.30 percent, outperforming both the Nairobi and Johannesburg Exchanges.
The banking sector emerged the most performing stocks with a gain of N1.045 trillion or 72.46 per cent from N1.442 trillion in January to N2.487 trillion at the close of business in December.
The market had closed bearish during the first quarter of the year with a loss of about N418 billion or 5.05 per cent.
Further breakdown of the daily transactions for the year showed that aside from the loss recorded during the first quarter, in April (the first month of the second quarter), the All-Share Index grew by 243.17 basis points or 0.95 per cent to close at 25,758.51 index points as against 25,515.34 recorded in March while the market capitalisation of equities appreciated by N85 billion or 0.95 per cent.
Trading activities in May revealed that the All-Share Index gained 3739.8 basis points or 14.51 percent to close at 29,498.31 index points as against 25,758.51 recorded the previous month while market capitalisation of equities appreciated by N1.284 trillion or 14.51 percent to close at N10.197 trillion compared to N8.913 trillion recorded the previous month.
In June, the All-Share Index gained 3619.17 basis points or 12.26 per cent to close at 33,117.48 basis points as against 29.498.31 recorded the previous month while the market capitalisation of equities appreciated by N1.255 trillion or 12.26 per cent to close at N11.452 trillion from N10.197 trillion.
Following the release of second quarter results, the stock market posted the highest gain in the month of July with a record of N901 billion or 28.99 per cent to close at N12.353 trillion compared to N11.452 trillion recorded the previous month.
However, due to profit takings, the stock market closed the month of August with a drop of N116 billion or 0.93 percent from N12.353 trillion recorded in July to N12.237 trillion on August. The market also closed down by N21 billion from N12.237 August to N12.216 trillion in September as investors sustained profit takings.
The market returned to green zone in October with a gain of N478 billion or 3.91 per cent from N12.216 trillion in September to N12.694 trillion posted in October.
The market capitalization also grew to N520 billion or 4.09 per cent in November to N13.214 trillion from N12.694 billion recorded in October.
The stock market closed December bullish with a gain of N395 billion from N13.214 trillion in November to N13.609 trillion in December.
NSE was recently rated one of the top five best performing global stock exchanges in 2017 by the CNN.
The rating revealed that the nation’s stock market toped equities markets of most major European, Middle Eastern and Asian countries.
Analysts have said the policies introduced by the Central Bank of Nigeria (CBN) in the management of the foreign exchange market helped notch Nigeria’s stock market to be amongst the five top best performing exchange for 2017.
The NSE was able to achieve this after posting losses for three consecutive years, 2014 to 2016, as a result of the introduction of new FX window in mid-April which helped stabilise volatility and liquidity in the FX market, pulling back foreign investors who have been waiting on the sideline, improved macro fundamentals as Nigeria exit recession and boost to external reserves.
The value of public companies on global stock markets grew by $12.4 trillion in 2017, according to S&P Dow Jones Indices, which included dividends in its calculation as a number of markets even outperformed the U.S.
A CNN report, which examined the performances of global equities’ markets, listed the United States stock market to have average 25 per cent, Nigeria 43 per cent, Turkey 43 per cent, Argentina 73 per cent and Hong Kong 35 per cent as the major outperformers.
Qatar was listed as the biggest loser, down by 19 per cent last year despite the big recovery of crude price. The small nation’s economy has been under pressure following its spat with Saudi Arabia, Bahrain and the UAE.
The report said the Nigerian stock market in 2017 recorded a 43 per cent gain after the Central Bank made it easier to swap foreign currencies through the special window called the ‘Investors’ and Exporters’ FX Window’ created in April which also helped the country ease out of a short but painful recession.
It has been noted that the Nigerian All-Share index is still miles below record highs set in early 2008, but a 43 per cent rally in 2017 has helped to close the gap.
The index suffered mightily in 2015 and 2016 as low oil prices, militant attacks, currency troubles, elections and Ebola outbreak hit investor sentiment.
Founder and CEO of Silk Invest, Zin Bekkali, explained that oil prices have moved higher, the Central Bank has made it easier to swap currencies and the economy has snapped out of recession, noting that “If you look at where we stand today, the (Nigerian) market is still one of the cheapest markets on the planet.”
Analysts are optimistic that stocks could keep rising in 2018 with continuous strengthening of its foreign exchange and on improved macro-economic indices.
Commenting on the current state of the market, some operators attributed the positive trend on the improvement of micro economy in terms of the stability of the naira and price of crude oil.
According to recent reports by analysts at FSDH, the recovery seems to be coming on the back of the recent increase in crude oil price, the increase in crude oil production in Nigeria and the Central Bank of Nigeria’s (CBN) continued supply of foreign exchange to both retail and corporate users.
The Managing Director, Crane Securities Limited, Mr. Mike Eze, in a chat with New Telegraph, said the Pension Fund Administrators and foreign investors are taking advantage to maximize capital gains.
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