*As index crosses 30,000 basis pts

By Nkiruka Nnorom

The bullish sentiment in the stock market, which has defied all odds in the socio-economic environment, was further strengthened last week following the commencement of third quarter (Q3) 2020 earnings announcement by the corporates.

A number of quoted companies, including MTN Communication Nigeria Plc, Nigerian Breweries (NB) Plc, Lafarge Africa Plc, Unilever Nigeria Plc, and Nestle Nigeria Plc among others, have released their respective Q3’20 financial reports, which analysts adjudged to be better than expected considering the headwinds in the economy.

Consequently, the benchmark All Share Index (ASI) soared to close at 30,530.69 points, the highest in the last 15 months as investors hunted for bargains following the release of some results last week.

The month-to-date (MTD) and year-to-date (YTD) return grew to 13.8 percent and 13.7 percent, respectively.

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Consequently, investors recorded N959 billion gains (the highest in recent years) during the week as the market capitalisation of all listed equities galloped to N15.958 trillion from N14.999 trillion in the previous week, indicating 6.4 percent increase.

Similarly, value and volume of trades grew 20 percent and 26.8 percent week-on-week (w/w) to N23.610 billion and 1.909 billion units respectively.

Meanwhile, investment analysts have said that Q3 earnings would continue to shape the direction of the market in the coming weeks.

In his comments, Victor Chiazor, Managing Director/CEO, FSL Securities, said: “This bull run in the equities market is expected to continue in the medium term owing to the current interest rate which effectively offers a negative real return to the investor in the fixed income space.

“Given that investors continue to search for higher yielding instruments, the equities market will continue to rally until dividend yields for most of the listed companies drop to levels lower than what is obtainable in the fixed income market.”

Corroborating his views, analysts at Cordros Capital, said: “We expect the direction of market performance to be shaped by the on-going Q3 earnings season as investors look for evidence that the relaxation of lockdown has provided a tailwind for corporate earnings.

“With yields on risk-free assets declining to sub 1% levels, we believe it is increasingly compelling for risk-averse investors to rotate their portfolio towards equities. Hence, we expect the bulls to maintain dominance in the week ahead.”

Further analysis of trading activities last week showed that investors’ interest in Nestle Nigeria Plc (+21.0%), BUA Cement Plc (+11.3%), Guaranty Trust Bank (+6.7%), Dangote Cement Plc (+5.9%) and Stanbic IBTC Holdings Plc (+5.7%) drove the benchmark index to the new high.

Performance across sectors was an all-round positive, as the consumer goods (+12.2%) sector topped the gainers’ chart trailed by the banking (+8.0%), industrial goods (+7.6%), oil and gas (+6.2%) and insurance sector, which rose by 5.6 percent.

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