Nigerian equities ended the first trading in 2021 with a net capital gain of N458 billion, setting out on another bullish run after netting N6.48 trillion as full-year return in 2020.
With 31 gainers against two losers in the first session of the year, average return for the day stood at 2.18 per cent, building on full-year return of 50.03 per cent recorded last year.
The All Share Index (ASI) – the value-based common index that tracks all share prices at the Nigerian Stock Exchange (NSE), rallied to 41,147.39 points from the year’s opening index of 40,270.72 points.
Aggregate market value of all quoted equities also rose from the year’s opening value of N21.057 trillion to close the first trading at N21.515 trillion.
All sectoral indices closed positive with the NSE Industrial Goods Index leading with average gain of 4.7 per cent. The NSE Insurance Index followed with a gain of 4.4 per cent. The NSE Banking Index appreciated by 3.7 per cent. The NSE Consumer Goods Index rose by 1.4 per cent while the NSE Oil & Gas Index inched up by 0.1 per cent.
Total turnover stood at 211.93 million shares valued at N1.41 billion in 3,438 deals. The most active stock was AIICO Insurance with a turnover of 87.5 million shares. FCMB Group followed with a turnover of 19.7 million shares while Transnational Corporation of Nigeria placed third with 12.8 million shares.
“We anticipate a sustained bullish performance in the next trading session,” Afrinvest Securities stated.
Benchmark indices at the NSE showed average full-year return of 50.03 per cent by the sound of the last closing gong for the 2020 business year. This implied net capital gain of N6.483 trillion. The recent highest return was 42.3 per cent recorded in 2017.
Many leading investment firms at the weekend said they expected the market to continue on its positive trajectory citing the impending earnings season and the relatively higher dividend yields for equities compared with the crashed rates at the fixed-income markets.
Through the lockdowns and disruptions occasioned by pandemic, and later the unrests due to protests against police highhandedness, the stock market braced the odds of hyperinflation and economic recession to sustain and build up attractive return since the second quarter.
While a steep decline of 18.75 per cent in March 2020 had driven the first quarter to a negative return of -20.7 per cent or net loss of N2.68 trillion, the market recovered in the second quarter with positive average return of 14.12 per cent or net capital gains of N1.656 trillion. It continued its rally with average return of 9.61 per cent or net capital gains of N1.23 trillion in third quarter 2020.
The 2020 recovery is particularly spectacular when viewed against the background of negative performance in recent years. After posting a world-ranking return of 42.3 per cent in 2017, the market had reversed to negative in 2018 with average full-year return of -17.81 per cent. In 2019, investors suffered net loss of about N1.71 trillion with negative average return of -14.60 per cent. Prior to 2017, the stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion.
With inflation rate at 14.89 per cent, yield or coupon or interest rate at the fixed-income market ranging from less than one per cent to a little above one per cent for one-year instrument to some seven per cent annual coupon for two decades and a half instrument, Nigerian equities’ return is the most attractive and the only positive-yielding return in 2020, even when adjusted for inflation and cost of capital.