The Nigerian Exchange’s (NGX) equities market capitalization increased by N3.3 trillion to N59.43 trillion week on week following the IPO of Aradel Holdings PLC.
Cowry Asset Limited warned investors in a note that despite macroeconomic challenges, notably the announcement of September’s inflation figures, which showed consumer price inflation climb to 32.70%, the local exchange remains bullish.
Stockbrokers said the deteriorating consumer price index, mostly due to ongoing increases in the food index, which accounts for more than 51% of Nigeria’s inflation basket, did nothing to dampen market confidence. The market index, or All-Share Index (ASI), rose 0.47% to settle at 98,070.23 points on Friday, boosted by Aradel Holdings Plc’s milestone debut.
A spate of stockbrokers reported in independent reports that the NGX market capitalisation increased by N3.3 trillion, or 5.95%, week on week to N59.43 trillion, citing figures from the home bourse.
Despite this remarkable increase, market breadth remained negative, with 42 stocks falling and 34 rising this week. Cowry Asset Limited stated in a report that while the mixed mood reflected underlying macroeconomic challenges, the year-to-date return was a good 31.16%, lagging the annual inflation rate.
Last week, Aradel Holdings Plc listed 4.34 billion shares at N702.69 per share through a ‘Listing by Introduction’. “This positive momentum, propelled by Aradel’s addition, helped maintain investor confidence, reinforcing the oil and gas sector’s participation in the equity market,” Cowry Asset Limited said.
Trading patterns revealed that equities market momentum weakened, resulting in lower traded volumes fueled by rebalancing activities across small, mid, and large-cap stocks.
As a result, the weekly trade value uptrend by 134.5% week-on-week to N73.89 billion, while the traded volumes this week maintained another week of decline by 51.2% week-on-week to 1.45 billion shares, all executed in 39,546 deals—a 6.91% decrease from the previous week.
Sectoral performance was largely in the positive region, as three out of the five sectors tracked closed northward. The Consumer Goods index gained 1.42%, followed by the Oil & Gas index and the Industrial index, which recorded gains of 1.08% and 0.04% week on week.
The oil and gas sector benefitted significantly from Aradel’s entry, reinforcing investor confidence in the sector. Cowry Asset Limited said these positive performances were driven by TRANSPOWER, MECURE, DANGSUGAR, OANDO, ETERNA, and SCOA, respectively.
On the other hand, investors continued their portfolio rebalancing in the week as they dumped financial stocks from the mix. Consequently, the Banking and Insurance indices were the laggards for the week, as they declined by 0.51% and 1.23% week on week.
These negative performances come on the back of a sell-off in REGALINS, INTENEGINS, ROYALEX, FIDELITYBNK, UBA, and JAIZBANK. TRANSPOWER (19%), MECURE (19%), DANGSUGAR (13%), SCOA (11%), and GOLDEN BREWERIES (10%) emerged as the top spots of attraction for equity investors in the week.
REGALINS (15%), TRIPPLE GEE (15%), CAVERTON (9%), ABCTRANS (9%), and VITAFOAM (9%) were the top losers in that manner for the week.
Cowry Asset Limited said market sentiment is expected to remain positive as investors anticipate more Q3 earnings reports. The market has already reacted favourably to several impressive Q3 releases, providing insight into potential year-end performance.
