BY BAMIDELE FAMOOFO
The equities market enjoyed a better patronage by investors in January 2022 as the value of transactions executed by leading stockbrokers increased by 138.27% year-on-year (YoY) compared with the performance in January 2021.
Data made available by the Nigerian Exchange Limited for the month of January showed that aggregate turnover value of top 10 broking firms stood at about N268.86billion as against about N112.84billion in January 2021.
Turnover in volume terms dropped by -37.83% at about 8.89billion units compared with 14.30billion units traded by investors in the same period in 2021.
According to the NGX, the top 10 stockbroking firms accounted for 83.01% of gross turnover value on the Exchange in January 2022 as against 48.37% recorded in the first month of 2021.
In volume terms, turnover in January 2022 increased by 215 basis points from 58.17% in January 2021 to 60.32% in 2022.
A general review of the equities market in January showed that it outperformed its peers as it offered investors a return of 9.15% year-to-date (YTD).
Real rate of return improved to (-6.73%0 from (-9.33%) in 2021 as All Share Index crossed the 45,000 mark to 46,624.67 at the end of the month of January.
Johannesburg Stock Exchange offered investors a return of 1.86% in January while Ghana Stock Exchange dropped to -0.81%. S&P recorded a negative return of -5.88% in the period while SSE stood at -7.65%.
Bismarck Rewane, Chief Executive Officer, Financial Derivatives Company Limited disclosed that the gain in the review period is attributable to bellwether gains. Investors’ optimism about impressive corporate earnings and attractive dividends is another reason why he said investors increased their patronage of the market.
Rewane noted in particular that activities on BUA Foods, Airtel Africa, and MTN among others impacted positively on the performance of the market.
BUA Foods hit the market unexpectedly and startled peers, contributing N792 billion to market liquidity and overtaking the sector’s unicorn (Nestle) by N21.7bn in market capitalization as share price gained 46.4% in four weeks.
“BUA Foods listing contributed N792 billion to market liquidity while large gains in Airtel Africa Plc increased its share price by 33% to N1, 271 units per share.
“Supported by BUA Foods’ listing on the exchange, investors positioning for attractive dividends in Tier 1 banks spurs gains in the banking space, higher oil prices drives gains in the oil and gas space,” he noted.
Rewane warned that there could be a reversal in BUA’s bullish trend as investors weighed fundamentals. He also noted that any uptick of fixed income yield will drain NGX gains.
A cursory look into the market performance in the months ahead showed that interest rates direction and corporate earnings will serve as a major watchdog for investors, as an upward trend in interest rates to trigger sell offs in equities space.
But investors still expected to rally for capitalized stocks in the near term, stimulated by strategic positioning for attractive dividend yields and impressive corporate earnings performance. It is also expected that political uncertainties as Nigeria moves towards the 2023 elections will force investors to tread cautiously.
