Equities market appreciates by N982bn in October amid corporate earnings
By Seun Ibiyemi
Equities market of the Nigerian Exchange (NGX) Limited appreciated by N982 billion in October 2021 as listed companies submitted nine months result and accounts to the bourse.
The month of October, which is the earnings reporting season, mostly of third-quarter (Q3) results, closed on a positive note, with the basic indicators recording their highest monthly gain since February 2021.
Nigerian NewsDirect gathered that the composite NGX All-Share index gained 1,817.43 basis points or 4.52 per cent to close at 42,038.60 points on October 29, 2021, from 40,221.17 basis points at which it opened for the month.
Similarly, market capitalisation appreciated by N982 billion to close the month of October at N21.938 trillion from N20.956 trillion at which it opened for the month.
On the sectorial indices, the NGX’s Banking index recorded the highest gain during the month with 10.66 per cent. NGX Oil & Gas index followed with a gain of 6.43 per cent, while NGX Pension index appreciated by 6.16 per cent.
NGX 30 index rose by 4.34 per cent; the NGX Industrial Goods index up by 4.21 per cent, while NGX Insurance index appreciated by 3.98 per cent. NGX Premium, Lotus II and Consumer Goods indices recorded a monthly gain of 2.85 per cent, 1.17 per cent and 0.41 per cent, respectively for the month of October 2021.
Capital market analysts stated that “The positive performance was as a result of positive buying interests, the better-than-expected corporate earnings, and inflow of funds searching for higher real returns amidst the relatively low-interest rates, inflationary environment, and the unclear direction of yields in the fixed income market.”
The chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said that the uptrend seen in the composite NGX All-Share index and the positive corporate earnings of listed companies released so far show that the Nigerian economy is still on the path of growth, saying that this is a reflection of the monetary policy stance driving economic activities again through relatively low-interest rates.
Omordion said that “There was also the impact of the recovery in oil prices at the international markets in the midst of a slower economic recovery driven by vaccination and positive buying sentiments among blue-chip and growth stocks.
“These triggered buying interests in the equity space that had been sustained for over four consecutive months of bull-run, as the monthly NGX index action formed a saucer chart pattern that supports an uptrend and market recovery on a higher traded volume and positive breadth.”
He added that “The positive close on bullish sentiments in the market was also despite the growing insecurity challenges across the country and crisis in the foreign exchange market and continued rise in external reserves. We do know that stock markets across the globe, as leading indicators of economic activities, are forward-looking. Consequently, it is not unexpected that the current share prices are reflecting the future earnings potentials of quoted companies, or their profitability, which is directly linked to economic activities and eventually the GDP.”
The managing director, Afrinvest Research & Consulting, Mr. Abiodun Keripe expressed optimism over the last quarter of 2021 equities market performance based on improvement in macro economy environment and pick up in business activities expected to support the equities market.
He noted that the sentiment in the equities market remained strong in the last quarter of result as it has been dominated by local investors.
Also, the managing director, Highcap Securities Limited, Mr. David Adnori, attributed stock market gain in October to impressive listed companies nine months corporate earnings and improved macroeconomic conditions.
According to him, the rising price of crude oil also increased demand for stocks on the NGX. The growth may extend to year end as most Q3 results are fantastic and the steady increase in global oil prices.
He, however said that “The recovery of the stock market could have been better but insecurity in the nation’s led to hike in inflation rate and investors have to react negatively.”
