Investors in equities market gain N1.38trn in Q1

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By Kayode Tokede

Investors trading on the equities market of The Nigerian Stock Exchange (NSE) gained N1.38 trillion in first three months of 2018 as price of blue-chip companies appreciate over stability in foreign exchange market.

The market capitalisation of the Exchange opened trading this year at N13.609 trillion to close on March 28 at N14.993 trillion, an increase of about N1.38 trillion or 10.2 per cent.

The NSE All-Share Index (NSE ASI) also gained 8.53 per cent to 41,504.51 basis points from 38,243.19 basis points the market opened this year.

The NSE ASI had recorded huge drop in March, dropping 4.21 per cent due to investors profit-taking as companies released weak earnings for 2017 financial year.

For the first three months of 2018, 10 out of 11 indices considered by Nigerian NewsDirect appreciated with NSE Alternative Securities Market (ASeM) Index down by 1.4 per cent to 1,071.68 basis points from 1,087.32 basis points the market opened in January.

The NSE Banking Index, NSE Oil/Gas Index and NSE Industrial Index continued to rally over stocks appreciation in some blue-chip companies listed on the Exchange.

Specifically, The NSE Banking Index gained 23.3 per cent to 586.16 basis points from 475.44 basis points while the NSE Oil/Gas Index gained 10.7 per cent to 366.19 basis points from 330.69      basis points.

Furthermore, NSE Industrial Index rose by 20.7 per cent to 2,384.93 basis points from 1,975.59    basis points the market opened for trading in January.

Nigerian equities had ranked within the top 10 best-performing stock markets globally in 2017 with average full-year return of 42.30 per cent, equivalent to net capital gain of about N4.36 trillion.

The ASI, which also doubles as Nigeria’s sovereign equities index, had opened 2017 at 26,874.62 basis points and closed the year at a high of 38,243.19 basis points.

Aggregate market value of all quoted equities on the NSE also closed 2017 at N13.609 trillion as against its opening value of N9.247 trillion for the year.

“The trend is likely to continue because we are approaching earnings season during which companies will declare their audited reports and dividend recommendations. Some companies have started already to submit their audited reports for regulatory approvals and we expect these reports to hit the market in the next few weeks, so you may see investors taking positions ahead of these,” said a broker.

Cordros Capital Limited-one of the most active stockbrokers at the stock market, in a three-case scenario said the equities market could hit another return of more than 40 per cent against the backdrop of the strong start so far this year and significantly favourable macroeconomic and political conditions. Cordros Capital, however, pitched a conservative average return of between 10 to 15 per cent for the year, under consideration of a moderate improvement in macroeconomic environment and modest election concerns.

FSDH Merchant Bank Limited stated that companies will make higher profit and consumers will earn more money in 2018, providing another robust base for equities rally.

FSDH Merchant Bank noted that economic data support strong possibility that business profit and consumer income will grow higher in 2018 than in the last three years.

According to FSDH, the improvement in the business expectations should drive business expansion and increase the employment of labour. This in turn will increase the consumers’ purchasing power. On the other hand, the increase in consumer expectations will increase spending which will have positive impact on businesses.

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