Equities Rebound on Renewed Interest in Banking Sector

Photo L-R: Gilles Kolifrath, Partner, Kramer Levin Naftalis & Frankel,  ISDA Member; Irene Robinson-Ayanwale, Head, Legal Department, The Nigerian Stock Exchange (NSE); Marilyn Ramplin, Founder, Novia One Group, incorporating Hedge Fund Academy; and Ade Bajomo, Executive Director, Market Operations and Technology, NSE, at the NSE X-Academy Training on “Legal and Risk Aspects of Derivatives & Clearing Central Counter Party Transactions” at Civic Centre, Victoria Island, Lagos today.

The Nigerian equities market rebounded today to erase losses in the previous two trading sessions as the benchmark index rose 1.4% to 33,598.20 points, thus pushing YTD gain to 25.0%. Today’s upbeat performance was buoyed by renewed interest in large-cap Banking and Consumer Goods stocks such as GUARANTY (+5.0%), ZENITH (+5.0%), NIGERIAN BREWERIES (+1.9%) and UNILEVER (+10.0%) which had witnessed price depreciations in previous trading sessions due to profit-taking by investors. Consequently, investors recouped N157.8bn as market capitalization expanded to N11.6tn. Also, activity level improved as volume and value traded grew 85.0% and 13.5% to 759.0m units and N6.3bn respectively.

Bullish Performance across Sectors
Performance across sectors was broadly bullish as all indices trended northward. The Banking index gained the most, advancing 2.9% on the back of gains in GUARANTY (+5.0%) and ZENITH (+5.0%) while appreciation in MANSARD (+3.3%) and CONTINSURE (+2.7%) drove the Insurance index 1.5% northwards. Likewise, the Oil & Gas index appreciated 1.3% due to upticks in OANDO (+8.1%) and SEPLAT (+1.2%) while the Consumer and Industrial Goods indices advanced 1.0% and 0.8% on account of gains in NIGERIAN BREWERIES (+1.9%) and WAPCO (+1.8%) respectively.

Investor Sentiment Strengthens
Investor sentiment as indicated by market breadth (advancers/decliners’ ratio) strengthened to 1.5x from 0.6x recorded yesterday as 34 stocks advanced while 22 declined. The best performing stocks were MAYBAKER (+10.2%), ASHAKACEM (+10.2%) and UNILEVER (+10.0%) while the worst performers were INTBREW (-4.8%), CUTIX (-4.6%) and 7UP (-4.4%). In line with our expectation, the market witnessed a rebound in today’s session as investors continue to search for opportunities in favoured sectors. Consequently, we expect the upbeat performance to persist in the near term as investors’ interest in the equities market remains largely driven by fundamental factors - improvements in the macroeconomic environment as well as administration of FX market policies.