The Nigerian Stock Exchange (NSE) pulled off surprising performance in the face of global economic meltdown induced by COVID-19 pandemic to rank the best in the world’s stock markets.
A Bloomberg report said Nigerian stocks are headed for their highest annual gain in seven years riding on low yields in fixed-income markets.
Nigeria’s equities benchmark index recorded its highest return, rising 45.7% this year. The report said it’s the most among 93 equity indexes tracked by Bloomberg, and makes the NSE the best performing stock market year-to-date.
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The unprecedented performance was attributed to investor’s appetite for riskier assets, which have remained strong due to persistent low yield on fixed-income instruments, Bloomberg said, citing Chapel Hill Denham’s note to clients on Tuesday. It added that it has been buoyed by traders positioning for Dangote’s share buyback program which is billed to hold this week.
Denham said the equities will continue to outperform bonds in 2021 given the current overstretched fixed-income valuations.
The report said the Lagos bourse gained 0.75% to 39,092 as of 13:47 p.m local time, to reach its highest level since June 2018.
The all-share index which opened at 38,800.01, inched higher by 310.16 points or 0.80 percent to cross the 39,000 mark and close at 39,110.17.
Also, the market capitalization rose by N167 billion to close at N20.446 trillion compared with N20.279 trillion achieved on Thursday before the Christmas and Boxing Day holidays.
Year-to-date returns are currently at 45.7 percent; the best annual return since 2013.
According to analysis by TheCable, investors had booked N7.31 trillion in gains as of December 22, 2020. The rally was also supported by the dovish stand of the Central Bank of Nigeria (CBN).
The apex bank cut the base monetary policy rate by 200 basis points to 11. 5 percent, in order to boost lending, discourage savings and drive growth to counter the pandemic effect on the economy, while also keeping rates low in the fixed income market.
Excess liquidity (created by CBN’s OMO restriction), the hunt for double-digit yields and depressed pricing, helped to rekindle local interests in the equities market in 2020.
The uptrend recorded at the end of trading on Tuesday was driven by price appreciation in medium and large capitalised stocks amongst which are; BUA Cement, Zenith Bank, Access Bank, NPF Microfinance Bank and NEM Insurance.
A breakdown of the price movement chart shows that Jaiz Bank dominated the gainers’ chart in percentage terms with 10 percent, to close at 66k per share.
NEM Insurance followed with 9.56 percent to close at N1.49, while Lasaco Assurance rose by 8.82 per cent to close at 37k per share.
NPF Microfinance Bank improved by 8.39 per cent to close at N1.68, while Japaul Gold and Ventures appreciated by 8.33 per cent to close at 52k per share.
Conversely, NCR led the laggards’ chart in percentage terms, losing 9.68 per cent to close at N1.96 per share.
FTN Cocoa Processors trailed with 8.99 per cent to close at 81k, while Trans-Nationwide Express shed 8.86 per cent to close at 72k per share.
Chams shed 8.70 per cent to close at 21k, while AXA Mansard Insurance lost 4.76 per cent to close at N1 per share.
Also, the total volume of shares traded rose by 85.4 percent with an exchange of 722.57 million shares worth N4.38 billion in 5,042 deals.
This was in contrast with a total of 381.72 million shares valued at N7.97 billion exchanged in 2,925 deals on Thursday.
Transactions in the shares of AIICO Insurance topped the activity chart with 273.13 million shares valued at N326.09 million.
Oando followed with 81.45 million shares worth N323.33 million, while FBN Holdings traded 41.09 million shares valued at N294.21 million.
Access Bank traded 40.14 million shares worth N353.27 million, while Champion Breweries transacted 36.33 million shares worth N30.16 million.