Investors in the nation’s stock market gained N253.7bn on Tuesday as the market capitalisation of equities listed on the Nigerian Stock Exchange rose above the N12tn mark. Equities listed on the NSE extended their gaining streak to the eighth consecutive day ― the longest since July 2017 as investors stepped up their bets on a market-pleasing outcome.
The market capitalisation increased from N11.852tn on Monday to N12.105tn on Tuesday, while the All Share Index increased by 2.1 per cent from 31,781.87 basis points on Monday to its highest level in almost four months at 32,462.31 bps on Tuesday.
Analysts at Afrinvest Securities Limited said the appetite of investors was beginning to increase towards cheap assets. An analyst at Exotix Capital, Olabisi Ayodeji, was quoted by Bloomberg as saying that the February 16 election was tipped to be a close contest between the two strongest candidates, President Muhammadu Buhari and Atiku Abubakar, a former vice-president promising to pursue more market-friendly policies.
Ayodeji said investors might be positioning for an Atiku win. She said, “The perception among foreign investors is that Atiku brings greater prospects for improved management of an economy that vies with South Africa to be the continent’s largest.
“If Atiku wins, the market should perform better after the elections. Conversely, a Buhari victory may prompt a negative reaction in stocks. The gains will probably be sustained until the weekend as what we will see after that will depend on what the outcome of the election is.”
Citigroup Incorporated analysts also said Nigeria’s stock market might rally if Buhari lost the election. They said Buhari had fallen short on meeting pledges to rejuvenate and diversify the oil-dependent economy and had mixed success in quelling rampant corruption in four years in office.
A Bloomberg research showed that even after their recent gains, Nigerian stocks were trading at lower valuations to frontier market peers: 7.6 times estimated earnings, compared with more than 11 times for members of the MSCI Frontier Markets Index.
It said in a technical sign that the stocks benchmark might have risen too far, too quickly, the 14-day relative strength index closed above 70 on Tuesday, finishing in “overbought” territory for the first time in more than a year.
However, activity level improved on Tuesday as the volume and value traded for the day increased by 5.5 per cent and 42.2 per cent to 580.413 million units and N8bn, respectively.
The most traded stocks by volume were Diamond Bank Plc (125.8 million units), Zenith Bank Plc (63.2 million units) and Guaranty Trust Bank Plc (57.1 million units), while the most traded stocks by value were GTB (N2.2bn), Zenith Bank (N1.6bn) and Dangote Cement Plc (N1.5bn)
Performance across sectors was largely bullish as four of five indices closed in the green.
The oil and gas index gained the most, recording a 4.1 per cent increase following price appreciation in Seplat Petroleum Development Company Plc and Oando Plc. The consumer goods and banking indices gained four per cent and 1.3 per cent respectively
Similarly, the industrial goods index advanced, albeit flattish, up by three basis points. On the flip side, the insurance index pared gains, declining by 0.2 per cent as the stocks of AIICO Insurance Plc and Prestige Assurance Plc witnessed profit-taking. Thirty-eight stocks advanced against 14 that declined.
The top gainers for the day were Dangote Flour Mills Plc, Jaiz Bank Plc, Livestock Feeds Plc and NPF Microfinance Bank Plc, all of which increased by 10 per cent each. The top five losers were Regency Assurance Plc, UACN Property Development Company Plc, Lasaco Assurance Plc, Unity Bank Plc and AIICO Insurance, whose respective share prices shed eight per cent, 7.85 per cent, 6.06 per cent, 5.94 per cent and 5.19 per cent.
Analysts at Afrinvest said, “In recent weeks, we have observed increased inflow into the domestic market despite the political risk. We believe concerns for post-election stability are beginning to moderate, thus the increased appetite for cheap assets. “Hence, we expect the market to record gains in the near-term.”