•Gain 5.5% …As investors earn N1.8trn in July
By Chinwendu Obienyi and Chukwuma Umeorah
Amid political uncertainties, inflation and FX pressure, transactions at the Nigerian Exchange Limited (NGX) closed the month of July 2023 on a positive note as its All Share Index (ASI) grew by 5.5 per cent, the best return for the market since 2017.
The positive return however marked NGX (+25.53 per cent) as one of the most performing exchanges as it outperformed other African exchanges like Kenya, Mauritius, Tanzania and Uganda whose indices fell by -17.24 per cent, -0.84 per cent, -5.30 per cent and -16.82 per cent respectively.
The gain was also supported by insider dealings among companies as directors and related parties consolidated their positions in a show by such investors of their belief in the inherent values of such companies, as well as sustained positive reactions to the ongoing reforms by President Bola Tinubu.
Despite the profit taking, selloffs and FX pressures witnessed within the period, the benchmark NGX All-Share index which opened the trading month at 60,968.27 points, closed at 64,337.52 points, representing a 5.53 per cent growth while market capitalization- listed value of equities, rose by N1.814 trillion from N33.197 trillion to N35.011 trillion.
Despite the decline on the last trading day of the month, the overall market trend remained bullish as the market’s year-to-date (YTD) – which measures the overall performance of the stock market from the beginning of the year until the specified date, gained 25.5 per cent at the end of the month under review.
Furthermore, monthly trading activity on the domestic bourse improved as average volume and value traded rose 58.6 per cent and 56.5 per cent month-on-month (m/m) to 1.1 billion units and N16.7 billion respectively. Analysing the performance of the market indices, the Oil and Gas index was the best performer – owing to the reforms in the sector, gaining 20.05 per cent and 101.40 per cent month-on-month (m/m) and YTD respectively.
The Insurance Index garnered 14.83 per cent m/m and 49.54 per cent YTD, Industrial Goods index gained 14.17 per cent m/m and 18.36 per cent, the Banking index stood at 3.84 per cent m/m and 60.53 per cent YTD while Consumer Goods Index slipped down by 4.58 per cent m/m while its YTD stood at 44.97 per cent.
Reacting to the performance of the market, economic analysts said that the prevailing mixed economic data and as well more corporate earnings dictated the tempo of the market. They also added that the finance and operating costs downplayed the performance of some quoted companies and added that more earnings and possible interim dividend declarations from companies would spur increased bargain-hunting activities on the bourse.
Speaking during a programme monitored by Daily Sun, Associate Research and Portfolio analyst at Zedcrest Wealth, Samson Owolabi, said that the issues like cash crunch, electioneering activities, change in administration and new reforms dictated the performance of the market and in the economy.
He noted that some companies particularly from the consumer goods sector made losses owing to the FX unification reform which affected their H1 financial results. Owolabi said, “This sector (Consumer goods) is exposed to the FX market and that is because there are companies who source loans from the FX market and use FX to source raw materials. Additionally, the cost of FX surged significantly from an average of N470/$1 to N800/$1”.