Chinwendu Obienyi
The Nigerian stock market gained ground for the ninth day in a row, with the benchmark All Share Index (ASI) improving further by 0.87 per cent to settle at 24,354.25 points after oil price climbed above $31 per barrel on Thursday.
Investors had hoped for a recovery in demand for oil after some countries, including Nigeria, are beginning to ease their coronavirus lockdowns. This sentiment has so far pushed the domestic bourse into the green following strong buys in equities.
At the close of transactions Thursday, the market capitalisation rose by N112 billion to close at N12.692 trillion. This means that investors have garnered about N695 billion in four days while the market’s year-to-date (YTD)YTD loss eased to -9.3 per cent.
Reacting to the performance of the market, analysts say the low yielding fixed income market, panic selling of stocks and the opening of the economy together with the secured release of the $3.4 billion International Monetary Fund (IMF) loan which is believed will boost the external reserves, is driving smart money into the stock market.
Speaking to Daily Sun, Managing Director, APT Securities, Kurfi Garba, believes that panic selling, initiatives adopted by some quoted companies and the recent easing of the lockdown by the Federal Government has injected confidence in the market.
“At the end of March 2020, the market lost about 24 per cent and that loss in three months was never experienced in the whole of 2018 and 2019. So if this happened just in a period of three months, you would have some form of panic selling as even some stocks have reached their all-time lows. For example, Nigerian Breweries have never traded at N22 in the last 10 years, PZ has never traded at N5 in the last 15 years and so foreign investors were rushing in an attempt to beat the devaluation of the Naira.
“Unfortunately, after they sold, they could not get the dollar to buy back to exit the market. So, on seeing stocks hitting lows, they started buying back and so this brought opportunity to their long term investors and traders to buy back some stocks. All of a sudden we have recovered some 14 per cent.
“Secondly, initiatives adopted by some quoted companies to declare and even pay dividend brought a bit of confidence to the investors who then decided to start buying back stocks because of future opportunities the stocks might have. Thirdly, the opening of the economy by the Federal Government and the approval/release of the $3.4 billion IMF loan gave hope and confidence to these investors, hence the strong rebound seen in Nigeria’s stock market”, he said.
Meanwhile, activity level at the country’s bourse advanced as the volume and value of stocks traded rose by 1.1 and 28.2 per cent, respectively, to 431.58 million units and N5.26 billion, exchanged in 5,860 deals.
Furthermore, 21 stocks appreciated in value, while twenty others depreciated. Royal Exchange led the chart with 10 per cent to close at 0.22 kobo per share, UPL followed with a gain of 9.80 per cent to close at N1.12, Conoil rose by 9.77 per cent to close at N19.10, Ardova increased by 9.69 per cent to close at N15.30 while Chip Plc garnered 9.09 per cent to close at 0.36 kobo.