Stock Exchange: Equities record capital gain of N1.13 trillion in January 2021

Nigerian equities closed weekend with net capital gain of N1.13 trillion in January 2021, continuing the world-leading rally that saw Nigerian stocks with a full-year return of N6.48 trillion in 2020.
Benchmark indices at the stock market indicated average return of 5.32 per cent in January 2021, equivalent to net capital gains of N1.13 trillion. The performance of the stocks ranked seventh in the world, according to Bloomberg World Equities Index.
Aggregate market value of quoted equities at the Nigerian Stock Exchange (NSE) rose from 2021’s opening value of N21.057 trillion to close weekend at N22.187 trillion. The All Share Index (ASI)- the value-based common index that tracks all share prices at the NSE – also rose simultaneously from its year’s opening index of 40,270.72 points to close weekend at 42,412.66 points.
Sectoral price analysis showed widespread positive sentiment across the market with indices closing on the upside. The NSE Insurance Index, which tracks insurance stocks, recorded the highest gain of 29.77 per cent as insurers rallied on the back of suspension of industry recapitalisation. The NSE Oil and Gas Index posted double-digit return of 12.43 per cent. The NSE Banking Index rose by 7.89 per cent.
The NSE 30 Index, which tracks the 30 largest stocks at the NSE, rallied by 4.93 per cent. The NSE Pension Index, which tracks stocks specially screened in line with pension investment guidelines, rose by 7.49 per cent. The NSE Consumer Goods Index appreciated by 7.04 per cent. The NSE Lotus Index posted average return of 3.55 per cent while the NSE Industrial Goods Index closed with modest return of 1.41 per cent.
Most analysts see positive outlook for Nigerian equities. Analysts at Afrinvest Securities said the recent decision of the Central Bank of Nigeria (CBN) to retain its rates would be supportive of the expected recovery in the domestic economy.
“We believe this provides clarity for the market and should drive increased activities in the equities market while we expect fixed income traders to remain active at the short end of the market. In the coming week, we expect to see slight profit-taking at the start of the week. However, we envisage market performance will be dictated by the performance of the earnings results,” Afrinvest Securities stated at the weekend.
Analysts at Cordros Securities said the outcome of the CBN meeting aligned with market expectations amid negative real returns in the fixed income market.
Analysts expected risk-averse investors to recalibrate their portfolio towards fundamentally sound stocks with attractive dividend yields.
“However, we advise investors to take positions in only fundamentally justified stocks as the fragility of the macroeconomic environment remains a significant headwind for corporate earnings,” Cordros Securities stated at the weekend.
Amid the COVID-19 pandemic and recession, Nigerian equities had played the full contrarian to close 2020 with net capital gain of N6.48 trillion. Benchmark indices at the Nigerian Stock Exchange (NSE) showed average full-year return of 50.03 per cent by the sound of the last closing gong for the 2020 business year. This implied net capital gain of N6.483 trillion. The recent highest return was 42.3 per cent recorded in 2017. The ASI closed 2020 at 40,270.72 points, 50.03 per cent above 26,842.07 points recorded as opening index for the year.
Aggregate market value of quoted equities at the NSE rose to N21.057 trillion by the end of last year as against N12.958 trillion recorded as opening value for the year, an increase of N8.1 trillion. The additional increase in value of market capitalisation, above the ASI percentage change, was due to additional or supplementary listing of shares during the year.
While a steep decline of 18.75 per cent in last March had driven the first quarter to a negative return of -20.7 per cent or net loss of N2.68 trillion, the market recovered in the second quarter with positive average return of 14.12 per cent or net capital gains of N1.656 trillion. It continued its rally with average return of 9.61 per cent or net capital gains of N1.23 trillion in third quarter 2020.
The recovery since 2020 is, particularly, spectacular when viewed against the background of negative performance in recent years. After posting a world-ranking return of 42.3 per cent in 2017, the market had reversed to negative in 2018 with average full-year return of -17.81 per cent. In 2019, investors suffered net loss of about N1.71 trillion with negative average return of -14.60 per cent. Prior to 2017, the stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015.
Against the expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion, The Nation.

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