Stock Market Gains N3.25trn in Two Months

Kayode Tokede

The Nigerian Exchange Limited (NGX) appreciated by N3.25 trillion in market capitalisation in the first two months of 2022.

The gains recorded by the NGX followed price appreciation in BUA Cement Plc, Airtel Africa Plc, Seplat Petroleum Plc, among other stocks.

The market capitalisation gained N3.25 trillion to close at N25.543 trillion at the end of February, from the N22.297 trillion it opened in 2022, while the NGX All-Share Index grew by 10.95 per cent to close at 47,394.53 basis points yesterday, up from the 42,716.44 basis points it closed in 2021.

In the last two months, investors’ return in equities has appreciated by 10.95 per cent, with the most gain recorded in January.

Data compiled by THISDAY showed that the gain recorded in January was 9.15 per cent, while in February, the stock market appreciated marginally by 1.67 per cent.

Further breakdown showed that the overall market capitalisation for the period rose by N2.83 trillion to close at N25.124 trillion as at January 31, 2022 from N22.297 trillion. Performance across sectors was bullish as at February 25, 2022. For instance, the NGX’s Oil & Gas index recorded the highest gain during the month, with a gain of 23.26 per cent.

Also, the Banking index up by 11.07 per cent, while the NSE Industrial Goods appreciated by 6.12 per cent. Others were the NGX Pension, NGX Premium, NGX 30 and NGX Lotus II indices recorded a year-to-date gain as at February 25, 2022 of 6.02 per cent, 5.89 per cent, 5.51 per cent and 1.12 per cent.

On the other side, the NGX Insurance declined by 4.51 per cent, while NGX Consumer Goods down by 0.51 per cent in the first two months of the year, 2022.

The market performance was buoyed by activities in the shares of BUA Foods that gained 53.5 per cent to close yesterday at N61.40 per share, followed by Airtel Africa that appreciated by 32 per cent in two months to close yesterday at N1,260.00 per share impacted on the stock market performance in the period under review.

In addition, Seplat Petroleum added 32.2 per cent in two months to close at N859.90 per share, while Dangote Cement added 6.4 per cent in two months to close as at Feb 28, 2022 at N273.50 per share.

Among the listed banks stock, Zenith bank appreciated by 7.75 per cent in two months to close at N27.10 per share.

Analysts attributed the development to the impressive earnings by major bellwethers and positive corporate actions. Also, market participants found significant value in small-cap stocks, some of which outperformed the market with significantly outsised gains.

Speaking with THISDAY on the market performance, the Managing Director/CEO of Trust Yields Securities Limited, Mr. Rasheed Yussuff said the stock market performance in the last two months was reflective of the performance of the economy.

According to him: “The domestic economy this year has been doing reasonably well, coupled with the steady increase in global oil prices.

“All these positive indicators have reflected in our stock market in the last two months. Things are looking less chaotic as everybody was anticipating this year and it is that optimism that is pushing the stock market high.

“We have also seen impressive corporate earnings by listed companies. Companies such as Zenith Bank, Seplat, among others are paying a robust dividend to shareholders. It will be against the background of these developments that the stock market will not appreciate impressive earnings and economic growth.”

On his part, the Managing Director, APT Securities and Funds Limited, Mallam Garba Kurfi, noted that the stock market in the last three years has not closed positive in two consecutive months.

According to him quoted companies such as Dangote Cement Plc, MTN Nigeria, Airtel Africa and Zenith Bank Plc have appreciated, impacting on the overall stock market growth in the last months of 2022.

He noted that impressive corporate earnings and proposed dividend by Seplat petroleum Plc Zenith Bank Plc, among others have boost investors’ confidence on listed stocks on the NGX.

According to him: “Of course, in 2021, there was global COVID-19 pandemic that affected companies on the Exchange and movement of goods and services. However, this year, the virus has been tackled with discovery of vaccines and we have witnessed ease of movement that created room for businesses to thrive and improve on their performances.”

Analyst at PAC Holdings, Mr. Wole Adeyeye explained that most listed stocks were below their intrinsic value and discerning investors have been taking advantage of the cheap stocks.

In its recent report titled: ‘Nigeria Outlook 2022,’ analysts at United Capital Plc had stated “We believe 2022 would be a year to target yields and in the case of equities, dividend yield. That said, we expect Q1, 2022 to remain fairly upbeat which presents investors with an opportunity to ride the momentum of positive corporate earnings and dividend announcements.

“Subsequently, we believe maintaining a passive approach towards equity investment in subsequent quarters would be prudent, with a preference for high yielding debt instruments. That said, we do not believe it will be all doom and gloom, as we expect pockets of opportunities to show up due to factors such as special corporate actions, exceptional corporate performance and depressed valuations.”