The Nigerian equity market sustained its bullish momentum in the month Oct-2020, buoyed by the depressed yield environment, buoyant system liquidity and better than expected Q3-2020 earnings publication. Specifically, the NSE-ASI surged +13.8% m/m, crossing the 30,000pt threshold to 30,530.7 points while YTD returns settled at +13.7%.
Worthy of note, investors gained almost N2.0tn during the month as equity market capitalization closed at c. N16.0tn. The sectoral analysis showed that all five sectors indices under our coverage closed the month in the green territory. The Consumer Goods sector (+20.3%) advanced the most, followed by Banking (+20.0%), Industrial Goods (+11.2%), Oil & Gas (+10.3%) and Insurance (+4.5%) sector indices.
Also, according to the corporate earnings released during the period, most of the corporates beat the consensus market expectations, to further fuel the rally. Elsewhere, MTN Nigeria announced the appointment of Karl Toriola as the Chief Executive Officer (CEO) while The Boards of Directors of Chemical and Allied Products PLC (“CAP”) and Portland Paints and Products Nigeria PLC (“Portland Paints”) announced their plan to merge both companies during the period.
This month, with sustained low yield environment and a rather expansionary monetary policy stance, the stock market will remain attractive for investors seeking high return. However, we do not rule out intermittent profit-taking by participants during the month. In all, we continue to see a further uptick in the share prices of the tier one banks, food processors, Agro-allied companies, cement makers and the Telcos.
We advise investors to take cautious positions in the brewers diversified consumer goods companies and tier-2 banks as they remain highly speculative.