The Nigerian stock market rose to a nine-year high on Thursday as the Nigerian Stock Exchange market capitalisation hit a record high of N15.317tn from N14.880tn reported on Wednesday.
The NSE All-Share Index rose to above 43,041.54 basis points, a level last seen in October 2008, after local and foreign investors bought shares across several sectors.
A total of 1.162 billion shares worth N17.375bn exchanged hands in 8,968 deals.
Stocks have gained strongly in January, extending 2017’s 43 per cent rise. Equities rallied for the sixth day on Thursday, climbing 2.9 per cent, to take the rise since the start of the year to 13.5 per cent.
Last year’s gain was the biggest since 2013, and traders had said they expected further advances fuelled by hopes of lower interest rates and a more stable currency.
On Wednesday, stocks posted their biggest one-day gain in seven months.
Likewise on Thursday, investors recorded gains to the tune of N436.1bn as market capitalisation rose to an all-time high of N15.317tn.
The day’s performance was propped up by sustained buying interest in Dangote Cement Plc, Guaranty Trust Bank Plc and Nigerian Breweries Plc, which gained respectively by two per cent, 4.9 per cent and 4.6 per cent.
On a similar note, activity level improved as volume and value traded inched 6.8 per cent and 30.7 per cent higher to 1.162 billion units and N17.375bn, respectively.
Performance across sectors was bullish as all indices closed on positive notes. The banking index was the top gainer, rising by 4.4 per cent on the back of buying interest across board. However, performance was driven largely by tier-1 banks – GTBank and Zenith Bank Plc, which appreciated by 4.9 per cent and 3.1 per cent, accordingly.
The industrial goods index followed suit, closing 3.3 per cent higher as a rise in Dangote Cement drove performance while the consumer goods index rose by 2.3 per cent following appreciations in Nigerian Breweries and Guinness Nigeria Plc, which gained respectively by 4.6 per cent and 9.6 per cent.
In the same vein, price appreciation in Seplat Petroleum Development Company Plc and Forte Oil Plc by 2.3 per cent and 8.7 per cent, respectively, boosted the oil/gas index by 2.7 per cent while the insurance index recorded a 1.7 per cent increase following a rally in AXA Mansard and Aiico Insurance Plc by 8.4 per cent and 3.5 per cent, accordingly.
Investor sentiment moderated consequent on 56 stocks advancing against 10 decliners.
The best performing stocks were Honeywell Flour Mill Plc, Cement Company of Northern Nigeria Plc and Champion Breweries Plc, which gained 10 per cent, 10 per cent and 9.9 per cent, respectively.
On the other hand, University Press Plc, Meyer Plc and Learn Africa Plc emerged the worst performing stocks, sliding respectively by 4.7 per cent, 4.5 per cent and four per cent.
Commenting on the market’s performance, analysts at Afrinvest Securities said, “Despite the decline in market breadth, sentiment remained positive. Hence, we expect the market to close of the week positive. “
But according to traders, foreign funds have been skewed towards a local debt market yielding as high as 18 per cent last year and equity is just catching up.
They added that funds had been taking positions in consumer goods while locals are snapping up shares in mid-tier banks in a switch from bonds, where the outlook for yields is negative as government seeks to lower its borrowing costs.
Year-end results due in March are also helping lift sentiment towards equities, Reuters quoted traders as saying, especially after data showed that Nigeria’s forex reserves had started to increase after a currency crisis, a sign of support for the naira.
However, weaker-than-expected profits might curtail the rally, and the run-up to presidential elections due in 2019 may create uncertainty as political risks rise, experts say.
Consumer spending is still under pressure as Nigeria has only recently emerged from recession and lenders are not growing their loan books. But investors are now buying for the long-term, analysts say.
Foreign investors have been buying Nigerian assets in trickles after the Central Bank of Nigeria last year lifted currency controls in a bid to attract inflows and support the naira.