Equities market reverses 2 months losses

Records 2.02% gains in April

By Nkiruka Nnorom

The two month bearish streak in the stock market was reversed last month following the reallocation of assets to equities over the impressive full year financial statements of quoted companies.

Analysts also point at the increased confidence bolstered by the sustained stability in crude oil prices in April.

Though the market recorded decline in three of the five weeks of last month,  the bulls, however, outpaced the bears, leading to N417 billion gains to investors and 2.02 percent increase in the benchmark stock exchange index, the All Share Index (ASI).

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Recall that activities in the market have been a struggle between the bears and bulls in the first quarter of the year, with the bears upstaging the bulls at last counts.

The market had recorded a massive increase in January, 2021, rising by 5.37 percent  after investors gained N1.131 trillion driven by low yields in  Treasury Bills (TBs).

However, in February, the market went on a full reverse, wiping out all the gains recorded in January following a shift in investors’ preference to fixed income in response to the uptick in TBs yields.

Investors lost whopping N1.38 trillion or 6.16 percent to the bearish market during the month.

The market sustained the downward tempo in March, though moderately (0.33%) as yields in fixed income continued to trend upwards.

However,  the two month downward trend was halted last month (April) following the buy interest triggered by the full year 2020 corporate earnings reports.

Consequently,  investors raked in N417 billion as the market capitalisation of all listed equities rose to N20.847 trillion from N20.429 trillion at the beginning of the month.

Also, the All Share Index went up to 39,834.42 points from 39,045.13 points,   representing 2.02 percent increase.

Analysis of the sectorial performance showed that activity was mixed with the banking and insurance sectors, recording a decline of 4.76 percent and 1.49 percent respectively.

On the flip side,  the industrial goods sector led the gainers, rising by 3.06 percent, followed by the consumer goods sector with 2.83 percent increase,   while the oil and gas sector advanced by 1.22 percent.

 

Analysts’ take

Appraising the market performance for the month,   David Adonri, Managing Director/CEO, Highcap Securities, said: “The equities market bounced back in April 2021 due to the impact of full year results released by companies. Investors confidence increased due to the realization that Covid-19 and heightened insecurity did not damage the balance sheet of companies. Rising crude oil price also increased investors confidence in the capital market.”

Agreeing with him,   Ambrose Omorodion, the Chief Relationship Officer at Investdata, posited that the 2020 full year and the first quarter (Q1) impressive corporate earnings triggered buying interest and the positive sentiment, which halted the two months of decline.

In his own views, Mallam Garba Kurfi, said that the Q1 performance contributed to the rebound, adding that some of the highly capitalised stocks, including BUA Cement, Dangote Cement, MTN Communication Nigeria Plc and Airtel Africa Plc enjoyed significant patronage within the month.

 

Outlook

Speaking on the outlook, Adonri of Highcap Securities, opined that the increasing coverage of vaccination and declining number of Covid-19 infections in Nigeria are likely to impact positively on the equities market this month (May). “The revision of the International Monetary Fund (IMF) Gross Domestic Product (GDP) growth rate for Nigeria from 1.5 percent to 2.7 percent in 2021 is also an important reason for the capital market to be upbeat for the remaining part of the year.

Omorodion of Investdata also projected an upbeat in performance  with the corporate actions dates extending to May, and players repositioning their portfolio on the strength of Q1 numbers. “The ongoing vaccination and economic recovery support will aid market rebound in the midst of rising inflation and yields in fixed income space,” he said.

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