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

Unlisted Securities Index Rises 0.91%

Published

4 hours ago

23/05/2026

Adedapo Adesanya

By Adedapo Adesanya

A 0.91 per cent growth was recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, May 22, after the share prices of four securities ended in green.

According to data, FrieslandCampina Wamco Plc went up by N15.61 to N179.67 per share from N164.06 per share, Newrest Asl Plc grew by N6.11 to N67.26 per unit from N61.15 per unit, Food Concepts Plc appreciated by 17 Kobo to N2.75 per share from N2.58 per share, and Nitrox Industrial Gases Plc added 6 Kobo to sell at N25.50 per unit compared with the previous day’s N25.44 per unit.

At the close of business, the market capitalisation chalked up N23.22 billion to settle at N2.561 trillion versus Thursday’s N2.538 trillion, and the NASD Unlisted Security Index (NSI) increased by 38.81 points to 4,281.28 points from 4,242.47 points.

During the session, the price of Central Securities and Clearing System (CSCS) Plc was down by N3.13 to N71.07 per share from N74.20 per share.

The activity chart showed that the volume of securities transacted by the market participants decreased yesterday by 81.6 per cent to 590,339 units from the 3.2 million units recorded on Thursday, as the number of deals shrank by 28.6 per cent to 30 deals from the 42 deals recorded a day earlier, while the value of securities increased by 0.5 per cent to N95.3 million from the preceding session’s N94.8 million.

Great Nigeria Insurance (GNI) Plc closed the day as the most active stock by value on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 61.2 million units traded for N4.1 billion.

The most active stock by volume on a year-to-date basis was GNI Plc, with the sale of 3.4 billion units for N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units exchanged for N415.7 million.

Economy

Stock Investors Gain N344bn amid Decline in Transactions

Published

4 hours ago

23/05/2026

Dipo Olowookere

By Dipo Olowookere

The Nigerian Exchange witnessed a decline in transactions on Friday despite closing higher by 0.22 per cent on the back of sustained bargain-hunting.

During the last trading session of the week, investors transacted 711.9 million equities valued at N29.1 billion in 62,386 deals compared with the 1.1 billion equities worth N31.0 billion traded in 62,448 deals in the previous day, indicating a decline in the trading volume, value, and number of deals by 35.28 per cent, 6.13 per cent, and 0.10 per cent, respectively.

Fidelity Bank closed the day as the most active stock with the sale of 198.1 million units for N4.6 billion, Access Holdings traded 69.7 million units worth N1.8 billion, Mutual Benefits exchanged 42.7 million units valued at N197.4 million, Japaul transacted 33.9 million units worth N134.4 million, and Zenith Bank sold 24.4 million units valued at N3.2 billion.

Yesterday, the industrial goods index rose by 0.53 per cent, the consumer goods sector jumped 0.28 per cent, the banking industry improved by 0.25 per cent, and the energy counter soared by 0.18 per cent, while the insurance space shed 0.18 per cent.

At the close of business, the All-Share Index (ASI) gained 536.98 points to finish at 249,712.37 points compared with the previous day’s 249,175.39 points, and the market capitalisation grew by N344 billion to N160.077 trillion from N159.733 trillion.

Aluminium Extrusion and DAAR Communications expanded by 10.00 per cent each to sell for N9.90 and N2.09, respectively, RT Briscoe surged by 9.93 per cent to N14.06, Learn Africa increased by 9.79 per cent to N12.90, and Red Star Express advanced by 9.56 per cent to N34.95.

On the flip side, Trans-Nationwide Express depreciated by 9.92 per cent to N5.72, Livestock Feeds dipped by 9.64 per cent to N8.90, The Initiates crashed by 8.65 per cent to N33.80, Ellah Lakes drowned by 8.64 per cent to N10.05, and Neimeth lost 6.36 per cent to trade at N10.30.

Economy

Naira Slips by N3.15 Against Dollar to Trade N1,375/$1 at Official Market

Published

4 hours ago

23/05/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira weakened against the United States Dollar by N3.15 or 0.23 per cent to N1,375.46/$1 from N1,372.31/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, May 22.

It was also a similar situation for the domestic currency against the Pound Sterling in the official market yesterday, as it lost N9.46 to sell for N1,849.72/£1 compared with the preceding session’s N1,840.26/£1, and against the Euro, it depreciated by N6.26 to close at N1,597.04/€1, in contrast to Thursday’s exchange rate of N1,590.78/€1.

At the GTBank FX desk, the Nigerian Naira tumbled against the Dollar during the session by N2 to trade at N1,381/$1 versus the previous day’s N1,379/$1, and at the parallel market, it remained unchanged at N1,390/$1.

Analysts at Cowry Asset Management Limited, in their weekly financial outlook, have projected the Naira will remain under soft pressure in near term due to continuous FX demand.

“Looking ahead, the Naira may remain under mild pressure in the near term due to persistent FX demand, though rising external reserves could help cushion volatility,” they noted.

Meanwhile, the Central Bank of Nigeria (CBN) this week reiterated that it would continue with its current policy direction to sustain the fight against inflation and stabilise the exchange rate.

This comes as the FX market has changed significantly under the ongoing reforms introduced by the apex bank, with increased market liquidity reducing the need for heavy intervention by the CBN. Its intervention currently accounts for only about 1.2 to 1.3 per cent of total market turnover in 2025, a development he said reflects the growing strength of the market.

Turnover has risen sharply from about $100 million in 2023 to roughly $550 million presently, with transactions occasionally climbing to as high as $1 billion in a single day.

A look at the cryptocurrency market showed that it was down on Friday as Mr Kevin Warsh was sworn in by President Donald Trump as the chairman of the US Federal Reserve, replacing Mr Jerome Powell, who will continue as a governor in the US central bank.

The appointment was made in the hope that he would lead the central bank to cut interest rates, but the Iran war has sent oil prices soaring and re-ignited what had been cooling inflation.

Ethereum (ETH) depreciated by 5.5 per cent to $2,010.90, Dogecoin (DOGE) lost 5.2 per cent to trade at $0.1001, Cardano (ADA) fell by 5.0 per cent to $0.2389, Solana (SOL) slipped by 4.9 per cent to $82.69, and Bitcoin (BTC) slid by 3.3 per cent to $74,950.02.

Further, Ripple (XRP) went down by 2.9 per cent to $1.32, Binance Coin (BNB) declined by 2.6 per cent to $641.61, and TRON (TRX) shrank by 1.2 per cent to $0.3606, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.