Equity trading on the Nigerian Stock Exchange recorded a gain of N2.1tn in the last one week. This is following investors’ buying pressures in response to macroeconomic policy changes, the outcome of American election and discovery of COVID-19 vaccine.
Checks by The PUNCH showed that activities on the stock market that opened the trading week on Monday at N16.21tn in market capitalisation and 31,016.17 in index hit N18.31tn and 35,037.46 index points on Friday, hence earned a gain of about N2.1tn or 12.97 per cent week-on-week.
The All-Share Index also grew by 4,021.29 basis points or 12.97 per cent.
The index measures the performance of the stock market and also reflects how prices of stocks have moved, which in turn determines how much investors made as gains or losses.
The Nigerian stocks had specifically hit a record high on Thursday last week, the highest in more than five years as massive buying pressures triggered a market-wide circuit breaker for the first time.
The NSE All Share Index posted its largest daily gain in more than five years on Thursday, November 12.
The ASI rose beyond the set threshold of five per cent, triggering a 30-minute trading halt of all stocks for the first time since the circuit breaker was introduced in 2016.
According to a statement from the exchange, the Circuit Breaker protocol was triggered at 12:55pm when the NSE ASI increased from 33,268.36 in the previous day’s trading to 34,959.39.
The market reopened at exactly 1:25p.m., with a 10-minute intraday auction session, before resuming continuous trading till the close of the day at 2:30pm.
Following the resumption of trading activities, the equities market recorded a 6.23 per cent increase in the ASI to close at 35,342.46 points, reaching a market capitalisation of N18.47tn
Circuit breakers are trading halts used by exchanges to guard against sharp fluctuations on the market.
They are designed to give the market an opportunity to take a break and adjust to all available information before reopening.
They provide protection against excessive volatility during continuous trading sessions of the market.
Circuit breakers provide the opportunity for greater information dissemination and assimilation to all market participants, including investors to facilitate better informed investment decision making during periods of high market volatility.
The first successful data from a late-stage COVID-19 vaccine trial spurred hopes of the global economy recovering quickly from a year of pandemic-driven crisis.
Most stocks had hit all-time lows as investors dumped stocks over concerns about the crash in oil prices and the COVID-19 pandemic.
Joe Biden’s clinching a tightly-fought presidential election also helped in fuelling gains in the local bourse in anticipation of good policies that will speed up emerging market development.
According to the exchange, equities continue to respond positively to macroeconomic policy changes such as the cut in Monetary Policy Rate by 100 basis points from 12.5 per cent to 11.5 per cent by the Central Bank of Nigeria in September 2020.
“It has also been observed that investors are targeting Nigerian companies with strong fundamentals with the expectation that they will best overcome the onslaught of COVID-19 and be able to distribute dividends to shareholders. This is particularly important given the low-interest-rate and negative real yield environment.”
The Senior Research Analyst at FXTM, Mr Lukman Otunuga, a global online financial trading and investing firm in an interview with our correspondent said the development was based around investors hunting for profit at a time when the country’s fixed income market was offering negative real yields.
“While the capital market could push higher in the near and even benefit from external forces like Biden’s victory and a potential cure for COVID-19, gains are likely to be capped by Nigeria’s domestic economic conditions,” he said.
Market closes week positive with 12.97% gain
Equity trading on the nation’s stock market last week sustained a positive outlook as the NSE All-Share Index and Market Capitalisation both appreciated by 12.97 per cent to close the week at 35,037.46 and N18.31tn, respectively.
Similarly, all other indices finished higher while the NSE ASeM Index closed flat.
A total turnover of 4.51 billion shares worth N58.73bn in 47,140 deals were traded last week by investors on the floor of the exchange, in contrast to a total of 2.07 billion shares valued at N22.64bn that exchanged hands the previous week in 25,187 deals.
The financial services industry (measured by volume) led the activity chart with 3.07 billion shares valued at N35.41bn traded in 25,894 deals; thus contributing 68.15 per cent and 60.29 per cent to the total equity turnover volume and value respectively.
The conglomerates industry followed with 437.82 million shares worth N771.28m in 1,864 deals.
The third place was the consumer goods industry, with a turnover of 373.61 million shares worth N7.82bn in 7,471 deals.
Trading in the top three equities namely Zenith Bank Plc, FBN Holding Plc and Transcorp Hotels Plc (measured by volume) accounted for 1.43 billion shares worth N18.08bn in 9,537 deals, contributing 31.63 per cent and 30.79 per cent to the total equity turnover volume and value, respectively.
On the bourse, 69 equities appreciated in price during the week, higher than 40 equities in the previous week.
Also, 12 equities depreciated in price, lower than 24 equities in the previous week, while 80 equities remained unchanged lower than 97 recorded in the previous week.
A total of 986,941 units of ETPs valued at N4.69bn were traded last week in 62 deals compared with a total of 238,441 units valued at N2.05bn transacted the previous week in eight deals.
A total of 13,332 units of bonds valued at N17.14m were traded last week in 19 deals compared with a total of 6,011 units valued at N7.54m transacted the previous week in 14 deals.