Equities investors had a good outing last week as the stock market recorded growth despite the challenges brought by the COVID-19 pandemic. Contrary to the negative performance recorded the previous week, the stock market recorded a positive performance as indicators closed higher.
Precisely, the Nigerian Stock Exchange (NSE) All-Share Index appreciated by 4.45 per cent to close at 24,045.40, while market capitalisation higher at N12.531 trillion.
Also volume and value of shares traded improved to 1.662 billion shares worth N18.205 billion in 28,791 deals, from N1.012 billion shares valued at N9.892 billion traded in 17,023 deals the previous week.
Given the low valuation in the market, many investors have been embarking on bargain hunting so as to increase their portfolios ahead of expected market recovery.
Having gained in the month of April after a decline in the first quarter of the year, the market sustained the bullish run for eight straight days before the bears resurfaced last Friday. The market garnered about N804 billion in the eight-day bullish run.
Market analysts had attributed the positive performance to low prices of stocks and reaction of investors to some of the improved first quarter results announced by some companies.
For instance, Senior Equity Research Analyst at Cordros Capital, Mustaha Wahab, said: “For us in Cordros, we believe the ultra-selloffs witnessed in March were an overreaction and that the market is now in a stronger condition than at the beginning of this COVID-19 episode. In other words, the panic element has eased significantly in our opinion.
“There have been a few developments over the recent past weeks, which I believe provide respite for investors. For one, Nigeria received the International Monetary Fund (IMF)’s approval for $3.4 billion (N1.2 trillion) loan request. The approval came earlier than expected and is the IMF’s largest COVID-19 emergency financing provided to-date. While the loan will do little to address the significantly stressed balance of payment condition, it sure will provide some notable support to the 2020 budget in a year where government spending is necessary,” Wahab said.
He noted that the positive results posted by some companies in the Q1 of 2020, also impacted the growth posted in April
“On the corporates side, we have seen some fairly impressive first quarter results thus far. The cumulative banks’ earnings that have been published to-date show earnings growth of eight per cent, with core income lines and asset quality fairly strong. For consumer goods companies, we like the fact that Nigerian Breweries Plc maintained revenue at last year’s level, even though profit was weaker (owing to high operating expenses). As expected, MTN Nigeria Communications Plc delivered strong numbers, driven by strong growth across revenue lines,” he said.
According to Mr. Oluropo Dada of Network Capital Limited, the digital channels deployed by the NSE to support remote trading which was overwhelmingly embraced by the traders, has contributed to the positive market performance being witnessed in the market.
“Everything worked seamlessly to the advantage of the market. The Q1 results of those big banks that provides over 65 per cent of the trading activities in the sector were released to the market and those results compared favourably with the historical records, meaning that those banks are still creating values. Also, dividend declared for 2019 financial years were paid by major banks during the month, thereby providing liquidity to the shareholders and by extension to the market,” he said.