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

NASD Exchange Rises 1.22% on Sustained Bargain-Hunting

Published

11 hours ago

28/02/2026

Adedapo Adesanya

By Adedapo Adesanya

Strong appetite for unlisted stocks further raised the NASD Over-the-Counter (OTC) Securities Exchange by 1.22 per cent on Friday, February 27.

Data revealed that the NASD Unlisted Security Index (NSI) was up by 49.41 points to 4,083.87 points from 4,034.46 points, and lifted the market capitalisation by N19.56 billion to N2.433 trillion from N2.413 trillion.

The volume of securities bought and sold by investors increased by 243.0 per cent to 4.5 million units from 1.3 million units, and the number of deals grew by 15.8 per cent to 44 deals from 38 deals, while the value of securities went down by 19.7 per cent to N82.5 million from N102.8 million.

Central Securities Clearing System (CSCS) Plc ended the session as the most active stock by value on a year-to-date basis with 35.0 million units valued at N2.1 billion, followed by Okitipupa Plc with 6.3 million units worth N1.1 billion, and Geo-Fluids Plc with 122.8 million units transacted for N480.4 million.

Resourcery Plc ended the day as the most traded stock by volume on a year-to-date basis with 1.05 billion units sold for N408.7 million, followed by Geo-Fluids Plc with 122.8 million units valued at N480.4 million, and CSCS Plc with 35.0 million units traded for N2.1 billion.

There were six price gainers yesterday led by FrieslandCampina Wamco Nigeria Plc, which added N9.02 to close at N111.46 per unui compared with the previous day’s N102.44 per unit, Nipco Plc appreciated by N6.00 to N284.00 per share from N278.00 per share, CSCS Plc recouped N1.87 to sell at N70.12 per unit versus Thursday’s value of N68.25 per unit, Geo-Fluids Plc improved by 17 Kobo to close at N3.18 per share versus N3.01 per share, Industrial and General Insurance (IGI) Plc advanced by 5 Kobo to sell at N50 Kobo per unit versus the preceding day’s 45 Kobo per unit, and Acorn Petroleum Plc chalked up 2 Kobo to settle at N1.34 per share, in contrast to the previous day’s N1.32 per share.

Economy

FX Liquidity Crunch Sinks Naira to N1,363/$1 at NAFEX, N1,370/$1 at Black Market

Published

11 hours ago

28/02/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira performed poorly against the United States Dollar in the different segments of the foreign exchange (FX) market on February 27, closing the week without a gain.

In the black market, the domestic currency weakened against the Dollar yesterday by N5 to close at N1,370/$1 compared with Thursday’s closing price of N1,365/$1, and at the GT Bank forex desk, it lost N2 to sell N1,369/$1 versus the N1,367/$1 it was sold a day earlier.

Yesterday, the Nigerian Naira lost N3.75 or 0.26 per cent against the greenback at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to trade at N1,363.39/$1 compared with the previous day’s N1,359.82/$1.

Also, the Naira depreciated against the Euro at the official market during the session by N2.33 to quote at N1,609.22/€1 versus N1,606.89/€1, and appreciated against the Pound Sterling by N6.74 to settle at N1,836.49/£1 compared with the preceding session’s N1,843.23/£1.

The Naira’s latest depreciation occurred as FX demand continued to outpace available supply, intensifying pressure in the market.

In response to the negative momentum, the Central Bank of Nigeria (CBN) intervened by selling Dollars to banks and other authorised dealers in an effort to stabilise the local currency. The move came barely a week after the apex bank had purchased about $190 million from the foreign exchange market to temper the Naira’s rally.

Specifically, the CBN injected $200 million into the official market between Tuesday and Wednesday through an intervention call. However, the liquidity support proved insufficient to reverse the currency’s downward trend.

Meanwhile, the cryptocurrency market declined on Friday, with Solana (SOL) down by 10.4 per cent to $78.60, as Dogecoin (DOGE) decreased by 9.5 per cent to $0.0982.

Further, Cardano (ADA) slumped 8.9 per cent to $0.2647, Ethereum (ETH) slipped by 8.6 per cent to $1,859.10, Ripple (XRP) shrank by 8.2 per cent to $1.30, Litecoin (LTC) lost 1.4 per cent to close at $52.39, Bitcoin (BTC) slid 5.9 per cent to $63,686.39, and Binance Coin (BNB) went down by 4.9 per cent to $596.64, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.

Economy

Oil Prices Climb on Geopolitical Anxiety

Published

11 hours ago

28/02/2026

Adedapo Adesanya

By Adedapo Adesanya

Oil prices rose about 2 per cent on Friday, with traders bracing for supply disruptions as nuclear talks between the United States and Iran were without an agreement.

Brent crude futures settled at $72.48 a barrel after chalking up $1.73 or 2.45 per cent, while US West Texas Intermediate crude futures finished at $67.02 a barrel, up $1.81 or 2.78 per cent.

The two sides agreed to extend indirect negotiations into next week, but traders grew sceptical that an agreement between US President Donald Trump’s administration and Iran was possible.

The US and Iran held indirect talks in Geneva on Thursday after Mr Trump ordered a military buildup in the region.

Oil prices gained during the talks, on media reports indicating that discussions had stalled over U.S. insistence on zero enrichment of uranium by Iran. However, prices eased after the mediator from Oman said the two sides had made progress.

They plan to resume negotiations with technical-level discussions scheduled next week in Vienna, Omani Foreign Minister Sayyid Badr Albusaidi said on X.

Market analysts noted that geopolitical risk premiums of $8 to $10 a barrel have been built into oil prices on fears that a conflict will disrupt Middle East supply through the Strait of Hormuz, where about 20 per cent of global oil supply passes.

To cushion the impact from a possible strike, one of the world’s largest oil producers, the United Arab Emirates (UAE), is set to export more of its flagship Murban crude in April, while Saudi Arabia said it would also increase oil production.

Additionally, Saudi Arabia may raise its April crude price to Asia for the first time in five months due to higher demand from India to replace Russian supplies, potentially raising it by about $1 a barrel.

Meanwhile, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is likely to consider raising oil output by 137,000 barrels per day for April at its March 1 meeting, after suspending production increases in the first quarter.

The resumption of output increases after a three-month pause would allow Saudi Arabia and the UAE to regain market share at a time when other OPEC+ members, such as Russia and Iran, contend with Western sanctions while Kazakhstan recovers from a series of oil production setbacks.

Eight OPEC+ producers – Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria and Oman will meet at the meeting on Sunday.