Economy

Factors Contributing to Stock Market Rally

Published

9 years ago

09/06/2017

By Modupe Gbadeyanka

The recent rally in the equity market has opened a window for the quoted companies to raise equity capital to finance their expansion projects. The bearish trends that dominated the equity market in the last few years have caused many companies to abandon the market as a source of raising long-term capital.

The Nigerian Stock Exchange All Share Index (NSEASI), which measures the performance of the equity market, appreciated by 20% between March 06, 2017 and May 31, 2017. A large proportion of this gain occurred in the last four weeks, as the Index appreciated by 15.13% between April 26 and May 31, 2017.

The Year-to-Date (YTD) return on the NSEASI as at May 31, 2017 stood at 9.76%. Although the return on the NSEASI is lower than the inflation rate of 17.24% as at April 2017 and the average YTD yield of 22.95% on the 364-Day Nigerian Treasury Bill (NTB), the returns on most of the highly capitalised stocks are higher than the inflation rate and the average yield on the 364-Day NTB.

The factors responsible for the appreciation in the equity market include the improvement in the Q1, 2017 results of quoted companies compared with the corresponding period of last year and the prospect of better performance in subsequent quarters.

Other factors include the increase in the supply of foreign exchange, improved crude oil production and price, improved investors’ confidence in the Nigerian economy and the financial market, increase in the participation of both the local and foreign investors in the markets and the boost to the economy by the passage of the Petroleum Industry Governance Bill (PIGB).

The sectoral analysis of performance of the equity market in the first five months of the year 2017 shows that the Banking sub-sector recorded the best performance, followed by the Insurance, Industrial and Consumer Goods sub-sectors.

The NSE Banking Index gained by 30.70% as at May 31, 2017; the NSE Insurance Index gained 9.77%; the NSE Industrial Index gained 9.15%, while the NSE Consumer Goods Index gained 2.97%.

Meanwhile, the NSE Oil and Gas Index lost 5.45% of its value in the period under review. As at May 31, 2017 the share price of Oando recorded a strong return of 80%, mainly due to the news of the signing of a Memorandum of Understanding (MoU) with the Federal Government of Nigeria (FGN) to manage the Port Harcourt Refinery.

Stanbic IBTC Holdings, UBA, GT Bank, Access Bank, and Zenith Bank all recorded impressive appreciation in their share prices on the strength of the impressive Q1 2017 results the banks announced. Although the profitability of FBN Holdings dropped in Q1 2017 compared with Q1 2016, the ongoing clean-up of its nonperforming assets sends a positive signal that the worst may be over. Transnational Corporation of Nigeria’s share price also recorded impressive appreciation as a result of the favourable Q1 2017 result the company announced.

There are indications that the company will benefit from the FGN intervention fund for the power sector.

The lull in the equity market in the last few years has paralysed equity capital raising exercise in the capital market. Quoted companies opted for debt capital to finance their expansion plans even in situations where the debt capital option was not the most appropriate. Some companies also sourced capital from abroad despite the exchange rate risk.

The recent economic challenges and the high interest rate on debt securities in Nigeria have imposed limitations on companies’ ability to issue debt capital to fund expansion. As the economy is gradually exiting the current recession, there would be a need for companies to expand production capacities.

Thus, the current rally in the equity capital market offers a great incentive for quoted companies to access the market to raise the needed equity capital for their expansion projects. As activities increase in the primary market segment of the equity market, the demand for debt capital may drop.

Consequently, we expect the interest rate and yields on the fixed income securities to drop.

Source: FSDH Research

Economy

NBA Demands Suspension of Controversial Tax Laws

Published

23 hours ago

24/12/2025

Modupe Gbadeyanka

By Modupe Gbadeyanka

The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.

In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.

A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.

To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”

“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.

It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”

“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.

“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.

“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.

“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.

Economy

MRS Oil, Two Others Raise NASD Bourse Higher by 0.52%

Published

1 day ago

24/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.

The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.

Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.

Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.

Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.

The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.

By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.

In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.

Economy

NGX All-Share Index Soars to 153,354.13 points

Published

1 day ago

24/12/2025

Dipo Olowookere

By Dipo Olowookere

It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.

The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.

Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.

Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.

At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.

This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.

VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.

In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.