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By Chinwendu Obienyi
Amid uncertainty in the global economy, Nigeria’s stock market is currently having a solid start in the month of May 2022 with investors increasing their bets on blue-chip companies in anticipation of continued expansion in profits.
Negative sentiments have been dominating global equities as investors’ appetite for risk assets was clouded by worries over rising global inflation, speedy interest-rate hikes by major central banks and China’s reinforcement of its zero-COVID policy, which stoked concerns about global growth.
However, the Nigerian equity market is happily disconnected from global markets as the NGX’s All Share Index (ASI) reached a 13-year high, crossing the 50,000 mark for the first time since 2008.
Specifically at the close of trading on Monday, the ASI rose by 1.90 per cent to close at 51,902.48 points from 50,935.03 points recorded in the previous trading session while market capitalization grew to N27.981 trillion from an opening value of N27.459 trillion as investors gained N522 billion.
Reacting to the development, analysts at Coronation Research attributed the low short-term market yields in the fixed income market while adding that investors’ participation in risk assets has been encouraging.
“Though the market was flattered in February and early March, better-than-expected FY 2021 earnings, positive earnings expectations for Q1 2022, corporate actions, and investors taking positions ahead of FY 2021 dividend payments continued to support the market.
Going into Q2, we expect the impact of market interest rate increases to be delayed. This may give breathing room for the market, particularly for stocks continuing to show top-line growth, steady margins and earnings growth. We continue to expect some agricultural stocks to prosper.
