Investors gain N418bn on NGX over 2020 impressive corporate earnings, CBN policy
By Kayode Tokede
Transactions on the equities market of Nigerian Exchange Limited (NGX) closed positively in April, and halted the two months of correction and pullbacks on renewed buying interest and positive sentiments as players reacted positively to corporate results in the midst of rising inflation and yields in the fixed income space.
The benchmark index gained 2.02 per cent to close at the month at 39,834.42 basis points from 39,045.13 basis points on March 31, 2021.
Also, market capitalisation for the month rose by N418 billion to close higher at N20.847 trillion, from an opening value of N20.429 trillion on March 31, 2021.
Market breadth for April was negative as decliners outpaced advancers in the ratio of 51:39 to short-lived the bear transition, to reflect mixed economic data, positive sentiment and more first quarter earnings reports that hit the market.
The earnings reports were impressive and higher than market expectations especially Healthcare, Agro-Business, Industrial goods, Telecommunication, Energy, few from Banking and consumer goods which helped the major sectors index to close positively except for Banking index that was down on the performing sectors chart for April.
The sectoral performance showed that premium stocks propelled the market the most in the period under review, gained 6.93 per cent, compared to 2.02 per cent rally recorded by the benchmark NGX All Share Index.
It was followed by the NSE pension which rose by 3.56 per cent to reflect investing public confidence on dividend paying stocks especially blue-chip companies and its resilient over the years; ahead of the NSE industrial goods index, which moved 3.06 per cent up.
On the flip side, the NSE Banking led by 4.76 per cent and NSE Insurance declined by 1.49 per cent.
Speaking on market performance for the period under review, an economist and president, Association of Capital Markets Academics of Nigeria (ACMAN), Prof. Uche Uwaleke, attributed the growth in equities market for last month to improved earnings amid the global pandemic
According to him, the main factor that supported positive sentiments in the stock market in the month of April was the release of corporate results by listed companies for financial year end 2020 which showed improved financial performance despite the COVID-19 pandemic.
“The other thing to note is that the market was down in February and March and so presented opportunities for bargain-hunting which boosted demand for a number of stocks considered undervalued.
“Another factor is the outcome of the MPC meeting held towards the end of March in which the policy rate was retained. The signal this sent to investors was that the CBN was not yet prepared to hike interest rate which encouraged more investors in the stock market.”
Responding also, the Managing Director, APT Securities and Funds Limited, Mallam Garba Kurfi, the equities market in April always closed positive, stressing that corporate earnings and investors taking position boost the market in the month under review.
In his words, he said, “Generally, equities market in April always closed positive. Even last year, the month of April gained more than what was gained this year.
“The reasons are end of the year result which mostly release in April but now because of the new policy of NGX which mandated listed companies to release Q4 result on or before end of January 31, and thereafter release on or before 31st March.
“The month of April marks down for the dividend. Despite that, the market gained because of the release Q1 result promote the market upward movement as well as the release of bonus by some companies which was not witness for in the previous years as in case of Stannic, Axamans and among others.
“The raise of inflation as well as the negative returns from the money market encouraged many Investors to invest in the capital markets to hedge against inflation contribute to positive returns.”
In addition, the chief operating officer of InvestData Consulting Limited, Ambrose Omordion said that “The global economy and market remain mixed as vaccine driven economic recovery across climates continue, as the World Bank recently upgraded the world economic growth outlook on ongoing vaccination and government polices at different level.
“Back home, the seeming economic recovery and mixed indicators are likely to continue in the new month as we expect more economic data and the events to confirm the real state of the nation economy as implementation of 2021 national budget and CBN intervention in critical sectors persist to boost productivity that will create employment and support recovery. Reasons for this are not far-fetched, given the impact of COVID-19 and insecurity in the system.
“In May, we expect the release of April consumer price index (CPI) by the National Bureau of Statistics (NBS), with inflation rising further; just as the CBN’s Purchasing Managers Index (PMI) for April is equally expected in this May. The nation’s GDP is also expected this month and would confirm the true state of the economy.”
He added that “As corporate earnings reporting season has been extended to May and June for the few march yearend accounts, these earnings fundamentals and dividend declaration will support the ongoing positive outlook in market as many high cap stocks have this month as their qualification dates and mark down which will keep the market oscillating and at the same support recovery.
“Traders and investors who understand the importance of combining fundaments and technical analysis in making investment decisions in the stock market should take this opportunity to position in some sectors for medium and short-term gains, especially the banking, telecom, Industrial, agribusiness and consumer goods after a carefully study of recent numbers being made available to the market.”
