Emmanuel OchayiNigeria’s equity market witnessed a notable rise in September, growing by 2.05% or N1.158 trillion. This surge pushed the market’s year-to-date return to an impressive +31.81%.
The rise came as investors poured money into banking, oil & gas, and insurance stocks, despite some profit-taking in consumer and industrial stocks.
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The Nigerian Exchange Limited (NGX) All-Share Index (ASI) began September at 96,579.54 points, closing the month at 98,558.79 points.
Similarly, market capitalisation increased from N55.477 trillion to N56.635 trillion by the month’s end. Analysts have pointed to the interest in banking and oil stocks as key drivers of this growth.
Abbey Mortgage Bank, for instance, saw its stock price climb from N2.50 to N2.75, while Africa Prudential rose from N9 to N9.90, indicating robust investor confidence.
According to a market analyst, “The equity market continues to show resilience as investors find value in banking and oil stocks. Despite the challenges, we expect these sectors to maintain their strong performance.”
Public Holiday Brings Modest Gains
Ahead of Nigeria’s Independence Day public holiday, the equity market recorded modest gains on the last trading day in September, with the market increasing by 0.10%. Investors saw a cumulative gain of about N58 billion. Stocks like Guinness, Japaul Gold, UBA, Access Holdings, and Veritas Kapital dominated trading, with 10,583 deals recorded, amounting to 1.857 billion shares worth N111.579 billion exchanged.
“Investors are cautiously optimistic, especially as we approach the third quarter results season,” stated another analyst, commenting on the rising activity in the equity market.
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Analysts Anticipate Volatility Ahead
Despite the positive trends, market analysts predict some volatility in the coming weeks. With third-quarter earnings reports on the horizon, investors are likely to adopt a cautious stance. Analysts at Vetiva Research believe that investors will likely take a “wait-and-see” approach in the short term, awaiting more clarity from the corporate earnings season.
“We anticipate some profit-taking activities as investors look to rebalance their portfolios ahead of the new quarter,” Vetiva Research said in a recent note. “There’s also a shift in sentiment toward the fixed-income market due to high yields, which could slow down equity market activities.”
Meristem analysts echoed similar sentiments, suggesting that the Monetary Policy Committee’s hawkish stance is likely to tighten liquidity in the system, leading to slower equity market activities. “We anticipate continued positive volatility in stocks like Julius Berger and United Capital this week,” said a Meristem analyst. “However, unless we see any major corporate actions, the market could close in the negative territory.”
Equity Market to Face Challenges from Fixed Income
In addition to investor caution around the third-quarter earnings season, the fixed-income market is expected to draw attention due to rising yields. This shift is anticipated to have a cooling effect on the equity market as investors look to lock in gains.
“Equity market performance may be dampened by the rising attractiveness of fixed-income securities,” said one analyst. “We expect some movement out of equities as the fixed-income market offers more security for risk-averse investors.”
Outlook for October
As the new quarter begins, market watchers will be closely monitoring key factors, including corporate earnings and monetary policies, that could influence the equity market. While sectors like banking and oil remain attractive, other areas of the market could see lower activity. Investors will likely continue to tread carefully in the weeks ahead, balancing optimism with caution.
In conclusion, Nigeria’s equity market is poised for both opportunities and challenges in the short term. The coming weeks will reveal whether the positive trends in sectors like banking and oil can continue to drive overall market growth.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
