Equities’ investors at the Nigerian Stock Exchange, NSE, raked in N765 billion in the three-month period that ended September 30, pushing the year-to-date gain for the first nine months of the year to N2.97 trillion.
Benchmark indices and sectoral trackers at the Nigerian Stock Exchange (NSE) indicated that Nigerian equities continued to outperform other classes of assets as historically low valuations, improved macroeconomic outlook and foreign exchange management sustained another quarter-on-quarter rally to push average year-to-date return by the nine-month period ended September 30, 2017 at 31.87 per cent.
While the profit-taking transactions had depressed most equities in the last month, most quoted equities still closed the third quarter at their four-year best performances with double-digit returns, ahead of inflation and benchmark interest rate. The average investors have seen their portfolios rising by almost a third while several investors are considerably higher than the average benchmark.
The nine-month average year-to-date return represents 15.87 percentage points and 17.87 percentage points above inflation rate and the Monetary Policy Rate (MPR)-interest rate benchmark, respectively. Adjusted for inflation and interest rate, the nominal real return stands positive at 1.87 per cent. Nigeria’s inflation rate stands at 16.0 per cent while the MPR is retained at 14 per cent.
Aggregate market value of all quoted equities on the NSE closed the third quarter at N12.217 trillion as against 2017’s opening value of N9.247 trillion, representing net capital gain of N2.97 trillion or 32.1 per cent. The All Share Index (ASI)-the benchmark index that doubles as sovereign equities index for Nigeria, crossed nine levels to close September at 35,439.98 points compared with its year’s opening index of 26,874.62 points, representing an increase of 31.87 per cent.
Investors in the banking sector continued to sustain their lead on the returns’ table with the NSE Banking Index indicating average year-to-date return of 60.46 per cent for the nine-month period. The NSE 30 Index, which tracks the 30 most capitalised companies, posted above average return of 35.75 per cent. The NSE Consumer Goods Index ended the period with 29.35 per cent.
The NSE Industrial Goods Index trailed with 24.37 per cent while the NSE Insurance Index posted a return of 10.64 per cent. However, the NSE Oil and Gas Index recorded a negative return of -10.19 per cent as oil and gas stocks continued on downtrend.
The NSE Pension Index, which tracks stocks specially screened in line with pension investment guidelines, showed that pensioners might be in for wider dining tables with above-average return of 50.81 per cent.
The NSE Lotus Islamic Index-which tracks stocks that comply with the Islamic law, recorded appreciable return of 21.01 per cent, underlining the attractiveness of ethical investment in the midst of the rally. The NSE Lotus Islamic Index excludes interest-based banks, breweries, gambling and overleveraged companies among others.
Quarter-on-quarter analysis showed that the ASI recorded average return of 7.01 per cent, suppressing a downtrend that saw a decline of 0.18 per cent in September. The overall market performance was driven by considerable rally in the consumer goods sector.
The NSE Consumer Goods Index doubled the average performance with a return of 15.89 per cent. The NSE Banking Index followed with a gain of 10.6 per cent. The NSE 30 Index recorded three-month return of 7.84 per cent.
The NSE Industrial Goods Index rose by 2.69 per cent while the NSE Insurance Index appreciated by 1.36 per cent. The NSE Pension Index and NSE Lotus Islamic Index rose by 5.52 per cent and 8.87 per cent respectively. The NSE Oil and Gas Index was the contrarian index, with a negative return of -13.1 per cent.
On a month-on-month basis, September was largely dominated by sell pressure as investors sought to monetise capital gains and locked in values into other equities and asset classes.
The ASI slipped by 0.18 per cent during the month, driven largely by declines in the oil and gas, industrial goods and consumer goods sectors.
NSE Oil and Gas Index slumped by 6.05 per cent. The NSE Industrial Goods Index dropped by 3.30 per cent. The NSE Consumer Goods Index depreciated by 2.65 per cent while the NSE 30 Index dipped by 0.95 per cent. However, the NSE Insurance Index indicated resurgence with positive return of 1.59 per cent while the NSE Banking Index inched up by 0.11 per cent.
The third quarter performance of the equities market further consolidated the upswing that dominated the first half of the equities market. Investors had netted more than N2.2 trillion in capital gains in the first half of this year with most quoted equities closing the first half at their four-year best performances. The six-month average year-to-date return stood at 23.23 per cent, equivalent to net capital gain of N2.2 trillion.
Aggregate market value of all quoted equities closed the first half at N11.452 trillion while the ASI closed at 33,117.48 points.
The sustained rebound in the equities market so far this year represents a major recovery for hard-pressed Nigerian investors, who had lost N3.98 trillion in the past three years.
