Despite the volatility witnessed in the Nigerian stock market in the month of November, investors’ investment went up by N2.081 trillion.
This is as the Nigerian Exchange’s benchmark All-Share index gained 8.72 per cent, making it the best monthly performance since May 2022.
The index, therefore, has halted the correction and bearish trend even if on a low traded volume despite being higher than that of October, signaling an uptrend and a relative return of strength to the market.
Investors saw opportunities in the low equity prices arising from the losses of the past few months, and the resultant higher dividend yields, and ahead of year-end seasonality. This also followed demand for highly priced stocks that had suffered losses before now, especially telecommunication and industrial goods stocks. Particularly, there were position taking in the shares of Airtel, MTNN, Dangote Cement, BUA Cement and others, which combined to pushed the market up.
Reviewing stock market activities in November, the basic indicators of the Nigerian Exchange (NGX), All-Share Index gained 8.72 per cent to close on November 30, 2022 at 47,660.04 basis points, from 42,716.44 points at which it opened for the month. Market capitalisation for the period rose by N2.081 trillion to close at N25.959 trillion as at November 30, 2022 from N23.878 trillion at which it opened trading for the month.
Despite, the mixed economic data, rising inflation and rate hike by the Central Bank of Nigeria (CBN), the better-than-expected Q3, 2022 corporate earnings reports, shorter time frame to achieve double-digit returns for fixed income market instruments and bargain hunting, investors positioned for higher dividend yields in equity assets. The NGX’s benchmark index chalked all of 8.72 per cent, almost recovering all of the 10.58 per cent lost in the month of October.
Meanwhile, the sectoral performance indices closed mixed. The NGX Industrial, Premium, NGX 30, Main Broad and Banking gained 13.17 per cent, 11.67 per cent, 8.57 per cent, 6.21 per cent and 4.94 per cent respectively. On the other hand, the Oil & Gas led the decliners after losing 8.44 per cent, followed by Consumers goods with 4.91 per cent declined.
November’s best performing stocks were Unity Bank, which gained 23.91 per cent on market sentiment. NEM Insurance followed on its impressive Q3 numbers and small share in issue after its share price appreciated by 20 per cent, while the Nigerian Exchange Group rose 18.98 per cent for the month.
On the other hand, the worst performing stocks, was SCOA, which lost 39.43 per cent of its opening price for the month. Guinness Nigeria shed 24 per cent on unimpressive Q1 earnings performance, while SUNU Assurance dipped by 22.86 per cent in November.
Speaking on the stock market performance, the vice president, Highcap Securities, Mr. David Adonri attributed the increase to CBN’s redesign of the naira, stressing that some high-network investors opted to invest in the stock market.
According to him, the only thing that drives stock market performance for the month of November is the effect of CBN’s redesigning of the naira. Otherwise, most of the economic factors were negative against the stock market. One can suspect some rich investors have channeled their funds through the stock market to beat CBN’s policy.
“The macroeconomy is in total disarray considering a hike in inflation, flood disasters, and tension towards 2023 general elections. Also, in November, there were many debt offers by Debt Management Office (DMO) including Sukuk.”
On market outlook, the chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said, “We expect a bull run, as traders and investors interpret happenings globally, fixed income yield environment, earnings report and economic data, coupled with portfolio repositioning ahead of the December seasonal trends and expectations in the midst financial market reset.
“This is given that oil price in the international market has continued tom oscillates and smart money are trying to rotate their positions as dividend yields are attractive at this point.”
He added that given the recent bull-run, profit taking is evitable, being a regular behaviour of stock markets, any price correction at this phase of market recovery will support the upside potentials, adding that this is especially as many fundamentally sound stocks remain underpriced, while the dividend yields of major blue-chips continue to look attractive, despite the recent rally.
