Stock Market Shrugs Off Insecurity Worries, Gained N3.02trn in Q1

Kayode Tokede

The market capitalisation of the Nigerian Exchange Limited (NGX) gained N3.02 trillion in the first quarter (Q1) of 2022, notwithstanding the growing insecurity concerns in the country.

The market performance was buoyed by impressive corporate earnings by major listed companies that saw some of them delivering robust dividend payout to shareholders.

Precisely, the market capitalisation gained N3.02 trillion to close on March 31, 2022, at N25.312 trillion, higher than the N22.297 trillion it opened for trading activities on January 4, 2021.

The NGX All-Share Index (ASI), which tracks the general market movement of all listed companies on the Exchange, also rose by 9.95 per cent to close at 46,965.48 basis points in the first Q1 2022.
Data compiled by THISDAY revealed that the sectoral performance of the NGX was bullish, as most indices closed the period on uptrend as at March 25, 2022.

For instance, the NGX Oil & Gas Index appreciated the most by 28.12 per cent. It was closely followed by the NGX Banking Index, which recorded a gain of 8.55 per cent, while the NGX Premium Board Index rose by 6.34 per cent.
Others were the NGX Pension, NGX Industrial Goods, NGX 30, and NGX Lotus II that went up by 6.34 per cent, 5.63 per cent, 5.39 per cent, 4.37 per cent, and 1.18 per cent, respectively.

On the other hand, the NGX Insurance and NGX Consumer Goods recorded year-to-date decline of 6.35 per cent and 4.21 per cent respectively, as at March 25, 2022.

On a monthly review, the Nigerian bourse witnessed positive price movements leading to a bull-run throughout January 2020, during which it closed with a 9.1 per cent month-on-month growth in the All-Share Index, and extended the gains by 1.7 per cent in February.  During the period, BUA Foods got listed, boosting the market capitalisation by N720 billion.

Speaking on the market performance in Q1 2022, Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion, said the stock market sustained positive sentiment and uptrend due to the influx of corporate actions and 2021 audited financials, as players reacted to the released numbers and dividend declared for year-end 2021 earnings.

Omordion said that was expected to support an uptrend during the earnings season, amid the oscillating oil prices, just as the market continues to interpret economic data in relationship with crude oil price and other factors, in the midst of profit-taking and portfolio rebalancing.

“This resulted in market players targeting fundamentally sound and dividend-paying stocks, as 2021 Q4 GDP was up at 3.98 per cent, while the International Monetary Fund called for a hike in the interest rate and further devaluation of the naira,” he added.

On the market outlook, Omordion projected mixed sentiment trading by investors in April and beyond, saying all eyes would be on the performance of the economy and how the country’s economic managers would navigate challenges, which included insecurity and activities externally.

According to him, investors would also be concerned about on-going war in Ukraine, energy supply chain distortion that had been one of the major factors driving inflation, insecurity, among other factors that have pushed cost of production, goods and services higher.

He added, “To invest profitably in this changing environment, you need investment education, trading plans and trading tools/software. These will help manage risk associated with volatility and unstable markets.”
An analyst at PAC Holdings, Mr. Wole Adeyeye, said investors priced in the dividend payout out by the listed companies, which according to him drove market performance.

Adeyeye said, “Investors have already priced in the dividend in January and February and that is why the market maintained positive growth during the period. However, there was profit-taking in March as most investors did not bother to wait for the dividend payment date.”
He predicted that in April, the stock market might witness cautious investors’ trading due to the uncertainties surrounding the economy.