The stock market increased by more than N1.8 trillion in July despite the country’s macroeconomic concerns, including the foreign exchange crisis, insecurity, and other issues.
The increase was fueled by earnings and dividend announcements from quoted companies, insider dealings between companies as directors and related parties solidified their positions to demonstrate to investors their faith in the inherent worth of such companies, and persistently positive responses to President Bola Tinubu’s ongoing reforms.
According to a study of market activity last month, the benchmark all-share index for Nigerian Exchange Limited (NGX), which started the trading month at 60,968.27 points, ended the month at 64,337.52 points, an increase of 25.53 percent.
Additionally, market capitalization increased from N33.197 trillion to N35.011 trillion by N1.814 trillion.Better-than-expected corporate profitability, bigger dividend payments, and substantially enhanced liquidity were also present since fixed income returns were unstable due to the high inflation rate, which encouraged investors to buy stocks and move money into the equity market.
Recall that on Friday of last week, investors exchanged 2.854 billion shares worth N37.645 billion in 41,547 trades on the Exchange’s floor.
Due to the uncertain outlook for fixed income rates and yields, institutional investors and majority owners bought securities throughout the month, which was reflected in the high traded volume and mixed emotions that were seen.
This came after some quoted businesses’ second quarter (Q2) results above the rate of inflation, creating expectations for improved earnings that will sustain pricing and payout at the end of the fiscal year.
Given the outcome of the Monetary Policy Committee meeting in the reviewed month, the current mixed economic data, as well as more corporate earnings, are now more appealing. Analysts believe that favorable earnings surprises and potential interim dividend declarations from companies would continue to spur increased bargaining.
They also mentioned the possibility of profit-taking on equities that have appreciated significantly. For instance, Codros Capital analysts stated: “In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market”.
At the end of yesterday’s trading, the market value of listed stocks was N35.011 trillion, down 1.10 percent from the N35.402 trillion recorded the day before.
The All Share Index (ASI) also declined, falling from 65056.37 points the day before to 64337.52 points, a decrease of 718.87 basis points.
Price declines of major and medium capitalized equities, including MTN Nigeria, Guinness, NASCON, Dangote Sugar Refinery (DSR), Eterna, NAHCO, and PZ Cussons, had an impact on the downturn.
According to market breadth, there was strong market sentiment; 19 stocks made up the gainers chart while 49 stocks declined. To finish at N27, 63 kobo, N15.30 kobo, N1.89 kobo, N1.80 kobo, and N1.17 kobo, respectively, six companies—Dangote Sugar Refinery, Sovereign Trust Insurance, Livestock, NPF Micro Finance Bank, and Caverton—each experienced a 10% fall in value.
