|
Listen now
|
Nigerian equities rank as the best performing market globally, outperforming African and global peers, thanks to market friendly reforms of president Bola Tinubu as investors have been smiling to the bank.
The NGX ASI is currently at 74,289.23 points, with a return of 44.23 percent year to date (YTD) (as of 22 December), that compares with Ghana SE (+29.70 percent), Nairobi SE (+27.60 percent), and JSE (+4.0 percent), and major developed market-S&P 500 (+19.70 percent), STOXX 600 (+9.70 percent), SSE (-2.10 percent), according to data from Cordros Securities Limited.
Of course, president Bola Tinubu kicked the ground rolling immediately after he was sworn in announced the unification of the exchange rate and the removal of subsidy on Premium Motor Spirit (PMS), which investors reacted to positively.
The unprecedented gains in the stock market is supported by upbeat corporate earnings, expectation of bumper dividend, and strong demand for blue-chip names such as Dangote Cement, Airtel Africa, and MTN Nigeria, according to the report by Cordros Securities. ‘
Additionally, there was strong share price performances in BUA Foods (+206 percent), Geregu, (+176.42 percent). Transnational Corporation is one of the best performers on the index with (+648.52 percent), driven by market reaction to the acquisition and consolidation of stake by the major shareholder.
The following event according to Cordros securities have influenced market sentiment: Zenith Bank receipt of approval-in-principle from the CBN to transition to a holding company structure; The Fund for Export Development in Africa’s acquisition of a 5.0 percent equity stake in GEREGU, Dangote Cement’s conclusion of the second tranche of its share repurchase programme, and Airtel Africa announcing the purchase of the 5G spectrum and an additional 4G spectrum in Nigeria.
It is important to note that investors put their monies in sectors such as Oil and Gas, (+124.50 percent); Banking (+1o5.7 percent); Consumer Goods, (94.60 percent); Insurance, (+67.70 percent), and industrial goods, (+12.50 percent).
Analysts at Cordros Securities said the rally in the Oil and Gas are underpinned by reforms in the downstream sectors.
TotalEnergies Marketing has a YTD return of (99.48 percent); MRS Oil, (+644.48 percent), and Conoil, (216.60 percent).
Furthermore, heightened investor interest was observed in (i) OANDO (+194.6 percent YTD) due to its dual delisting and takeover plans by its majority shareholder, Ocean and Oil Development Partners, and (ii) SEPLAT (+129.4 percent YTD), driven by the revision of the Share Sale and Purchase Agreement (SSPA) with ExxonMobil and a robust earnings performance.
In the consumer goods space, Dangote Sugar and Nascon recorded price gains of 257.94 percent and 363.06 percent, driven by the announcement of a proposed merger of the two entities.
“This has undeniably been one of the most successful years for our market, driven by market-oriented reforms introduced by the new administration. As our clients and intermediaries, you have played an important role in the remarkable performance witnessed so far,” said Temi Popoola, Chief Executive Officer of the Nigerian Exchange Limited.
Based on its 2023 P/E ratio, the Nigerian equities market is currently trading at a discount (10.2x) compared to its historical 7-year average of 11.6x, according to data from Cordros Securities.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!