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Investors are anticipating peaceful general elections in Nigeria, following which a number of them are already taking position in equities, a development that is responsible for the increasing positive sentiment in the Nigerian capital market. Analysts are unanimous that foreign investors overpriced Nigerian political uncertainties into the equity market.
The All Share Index (ASI) which gauges the market momentum is gradually heading towards the positive territory as it closed at -0.01 percent after the fourth week of trading in 2019. ASI closed at 31, 426.63 basis points last Friday as against 31,430.50 basis points on the last trading day of 2018.
The number of stocks that have appreciated year to date rose to 38 as against 17 in the first week of this year. Also, 13 stocks had their prices remain unchanged, while 44 stocks shed various amounts in their prices.
Market capitalisation of quoted stocks rose to N11.71 trillion last week Friday compared with N11.72 trillion on the last trading day of 2018. The NSE Main Board Index, NSE Banking Index, NSE Lotus Islamic Index and NSE Industrial Index are the earliest sub sectoral indexes to return to the positive territory as they closed at 0.07 percent, 1.93 percent, 1.87 percent and 6.54 percent respectively.
“The early birds are taking position in value stocks ahead of a justified post-election rally, with the conviction that the election would be seamless given the maturing democracy in Nigeria and the experience of 2015. More so, major parties contending at the national level both agree on the major problems facing the country and the need to execute reforms relevant to achieve the desired results.
“Hence savvy investors are taking early bets on the positive outlook on the country particularly as valuations of most counters are at notable discount to intrinsic values. Interestingly, the earning season is fast approaching and dividend yields are quite compelling at an average of 9 percent on many defensive stocks in the banking sector, with established dividend history”, said Rasak Abiola, head, investor relations at the United Bank for Africa(UBA) Plc.
“It is positioning ahead of the elections. The momentum towards the election is not coming with as much as apprehension as earlier anticipated”, said Kemi Akinde, senior analyst at Meristem Securities.
C & I Leasing led the gainers table by gaining 407.9 percent year to date. Royal Exchange rose by 40.9 percent year to date, and the construction giant Julius Berger garnered 39.3 percent year to date. Cement Company of Northern Nigeria (CCNN) was up by 23.7 percent while Fidelity Bank at 23.2 percent completes the top five most appreciated stocks year to date.
On the losers’ table are Law Union, UAC Property, GlaxoSmithKline, Beta Glass and Resort Savings. Law Union has shed 16.7 percent from its share price year to date. UAC Property shed 16.8 percent from its share price; GSK, -17.2 percent; Beta Glass, -19.5 percent and Resort Savings, -60 percent.
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