Investors in Nigerian equities netted N1.93 trillion in capital gains in October 2020, sustaining a four-month consecutive upswing that has seen Nigerian equities outflanking global equities performance in most instances. Last week, Nigerian equities played the global contrarian with average return of 6.39 per cent, equivalent to net capital gains of N959 billion within four trading sessions, even as nearly all advanced and emerging global markets closed negative.
Benchmark indices at Nigerian Stock Exchange (NSE) at the weekend indicated average return of 13.79 per cent in October 2020, equivalent to net capital gains of N1.93 trillion, more than a double of N785 billion recorded as net capital gains in September 2020. Average year-to-date return thus trended upward to a double-digit 13.74 per cent, representing net capital gains of N1.78 trillion for the 10-month period ended October 2020.
As Nigerian equities surged to their highest prices in 16 months at the weekend, most global stocks were in the red. From America to Europe, Asian, Middle East and Africa, most stock indices closed negative last week. In United States, S & P 500 Index and NASDAQ Index dropped by 5.9 per cent and 5.2 per cent respectively. United Kingdom’s FTSE All Share Index (ASI) declined by 4.9 per cent. Germany’s XETRA DAX Index posted a week-on-week return of -8.8 per cent. France’s CAC 40 Index depreciated by 6.7 per cent. China’s Shanghai Composite Index dropped by 1.6 per cent. Japan’s Nikkei 225 Index depreciated by 2.3 per cent while Hong Kong’s Hang Seng Index dipped by 3.3 per cent.
Also, Russia’s RTS Index slumped by 8.4 per cent. India’s BSE Sens Index declined by 2.6 per cent. Brazil’s Ibovespa Index returned -6.6 per cent. Turkey’s BIST 100 Index lost 7.2 per cent. Saudi Arabia’s Tadawul All Share Index also dropped by 7.0 per cent. The MSCI EM Index, which tracks emerging markets, posted a negative return of -2.7 while the twin MSCI FM Index, which tracks frontier markets, declined by 0.5 per cent.
In Africa, South Africa’s FTSE/JSE All Share Index declined by 6.6 per cent. Egypt’s EGX 30 Index dropped by 5.3 per cent. Kenya’s NSE 20 Index slipped by 0.9 per cent. Ghana’s GSE Composite Index dipped by 0.3 per cent while Mauritius’ SEMDEX Index depreciated by 0.6 per cent.
All Share Index (ASI)- the value-based common index that tracks share prices at the NSE, closed weekend at 30,530.69 points, its highest since June 2019. It opened last week at 28,697.06 points. It had closed September 2020 at 26,831.76 points as against 25,327.13 points recorded in August 2020 and 24,479.22 points recorded at the beginning of the third quarter, the closing index for June 30, 2020. The ASI had opened the year at 26,842.07 points.
Aggregate market value of all quoted equities crossed the N15 trillion mark to close weekend at N15.957 trillion as against N14.999 trillion recorded at the beginning of the week and N14.025 trillion recorded as the opening value for October 2020. It had opened the year at N12.958 trillion but slipped to N12.770 trillion by the end of the first half.
Most analysts at the weekend appeared to have a consensus on the positive influence of third quarter earnings on share prices, fuelling bullish trading in a market already filled with bargain-hunters seeking higher returns in the face of declining yields in the fixed-income market.
“We expect the direction of market performance to be shaped by the ongoing third quarter earnings season as investors look for evidence that the relaxation of lockdown has provided a tailwind for corporate earnings,” Cordros Securities stated in a weekend note.
Analysts noted that with yields on risk-free assets declining below one per cent, there is increasingly compelling reason for risk-averse investors to rotate their portfolio towards equities, hence, the bulls may maintain dominance in the week ahead.
Afrinvest Securities also noted that the bullish trading was due to “positive sentiment surrounding third quarter earnings results”, but it cautioned that there could be slight profit-taking at the start of this week.
Total turnover at NSE last week stood at 1.909 billion shares worth N23.610 billion in 23,578 deals as against 1.505 billion shares valued at N19.668 billion traded in 20,552 deals two weeks ago. Financial services industry led the activity chart with 1.478 billion shares valued at N15.576 billion in 12,546 deals; contributing 77.41 per cent and 65.97 per cent to the total equity turnover volume and value respectively. The consumer goods industry followed with 131.788 million shares worth N2.613 billion in 4,112 deals while industrial goods industry placed third with a turnover of 83.526 million shares worth N3.573 billion in 1,818 deals.
Banks continued to dominate activities chart with the trio of FBN Holding Plc, Zenith Bank Plc and Access Bank Plc emerging as the three most active stocks last week. The three most active stocks accounted for 576.514 million shares worth N6.791 billion in 4,652 deals, contributing 30.19 per cent and 28.76 per cent to the total equity turnover volume and value respectively.
Nigerian equities had sustained their bullish rally for the second consecutive quarter with a net capital gain of about N1.23 trillion in the third quarter. The ASI indicated average gain of 9.61 per cent in the third quarter ended September 30, 2020, equivalent to net capital gain of N1.227 trillion.
Nigerian equities had witnessed a major recovery in the second quarter ended June 30, 2020 with positive average return of 14.12 per cent within the three-month period, representing net capital gains of N1.656 trillion.
Nigerian stocks had posted net loss of N2.68 trillion in the first quarter, which overshadowed the second quarter recovery, leaving investors with net loss of N1.14 trillion for the six-month, half-year period. The ASI had posted a double-digit negative return of 20.7 per cent in the first quarter, driven by a steep decline of 18.75 per cent in March 2020.
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