Recent developments in the nation’s capital market may have pushed the Nigerian Stock Exchange (NSE) to the top, as it closed as the world’s best performer.
An analysis of 16 selected stock markets across America, Europe, Africa and Asia by researchers from FSDH Merchant Bank put the NSE All-Share Index (ASI) firmly at the top of the chart with a month-on-month (MoM) increase of 12.27 per cent.
The NSE ASI recorded the highest MoM appreciation of 12.27 per cent to close at 33,117.48 points with YTD gains at 23.23 per cent as at June 30, 2017. This was followed by the Nairobi All Share Index (Kenya) with a MoM gain of 3.05 per cent and a YTD gain of 14.68 per cent.
On the flip side of the chart, the FTSE/JSE Africa All Share Index (South Africa) recorded the highest MoM loss of 3.64 per cent but recorded a YTD gain of 1.89 per cent. This was followed by the CAC 40 Index (France) with a MoM depreciation of 3.08 per cent but a YTD appreciation of 5.31 per cent.
Other market indices analysed were the Dow Jones Industrial Average, which closed the month of June with a MoM appreciation of 1.62 per cent, the S&P 500 index was up 0.48 per cent. The Brazil stock market increased 0.30 per cent, Ghana’s ASI improved 2.34 per cent, Japan’s Nikkei 225 added 1.95 per cent, China’s Shanghai Stock Exchange Composite Index gained 2.41 per cent and Hong Kong’s Hang Send Index was up by 0.41 per cent MoM.
European stocks ended the month on a lower note with UK’s FTSE100 index down by 2.76 per cent posting the second biggest MoM loss after France. Germany was next with a MoM decline of 2.30 per cent while the Swiss Market Index closed negative at 1.22 per cent. Nasdaq Composite trailed with a MoM depreciation of 0.94 per cent and India’s S&P BSE Sensex Index completed the 16 list of analysed stock markets with a decline of 0.72 per cent.
According to FSDH research analysts, the improved macroeconomic environment, especially the increased supply of foreign exchange, which has resulted in buoyed investors’ sentiments, continues to have a positive impact on Nigeria’s equity market.
The market capitalisation similarly recorded a MoM gain of 12.30 per cent (a gain of 12.14 per cent in US$) to close at ₦11.45 trillion ($37.44 billion).
The difference in the rate of change between the market capitalisation and the index was due to the addition of 396.79 million ordinary shares to the outstanding shares of Oando Plc on the NSE, following the conclusion of a debt to equity conversion exercise.
The analysts noted that market activities increased in the month of June 2017, compared with May 2017 while, “the volume of stocks traded increased by 7.49 per cent to N10.46 billion. Access Bank Plc and FBN Holdings Plc were the two most highly traded stocks in June 2017.
“The value of stocks traded on the NSE in June 2017 also increased by 7.13 per cent to ₦110.14 billion. All the sectoral indices rose in June 2017, compared with May 2017 except the NSE Insurance Index, which declined by 0.56 per cent MoM.
“The NSE Banking Index recorded the highest appreciation of 11 per cent, with a YTD appreciation of 45.08 per cent. The gain in the NSE Banking Index is mainly attributed to the increase in the share prices of Sterling Bank, UBA and Zenith Bank. The NSE Industrial Index recorded a MoM gain of 10.96 per cent with a YTD gain of 21.12 per cent.”
On the outlook for the month of July, the analysts said, “we expect to see some profit taking in the equity market in July 2017. However, we expect the overall performance of the equity market for July 2017 to be positive, especially if companies report strong Q2 June 2017 results.
“The following factors may drive performance – the stability in the macroeconomic environment, strong Q2 results from quoted companies, improved sentiments towards the Nigerian economy, the sustained liquidity in the foreign exchange market, and any unexpected possible change in the MPC policy decision.”
They recommended that investors should maintain a medium-to-long term position in stocks that have good fundamentals and that, “investors should also take strategic positions in interim dividend paying stocks. Building materials, food and beverages, agro-allied processing and banking stocks offer attractive returns.”