The Nigerian Stock Exchange (NSE) recorded profit of N2.75trillion in the last two months (September and October 2020) following investors’ high demand for undervalued stocks.
This is in spite of the #EndSARS protests and the attendant losses recorded by many businesses due to lootings carried out by hoodlums, investors were demanding the stocks of companies that were trading at low prices.
There is also a sharp drop in fixed income yields, following further monetary easing by the Monetary Policy Committee (MPC) of the central Bank of Nigeria.
Most stocks had hit all-time lows as investors dumped stocks over concerns about the crash in oil prices and the COVID-19 pandemic.
Enhanced by remote trading, the gradual easing of lockdown and monetary policies of the Federal Government, the equity market defied the negative impact of the continuous spread of CODIV-19 pandemic on the Nigerian economy as investors leveraged undervalued stocks.
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The stock market showed resilience, ending the two months with unprecedented growth as the market capitalisation rose from N13.21trillion at the beginning of trading on September 1 to N15.96trillion at the close of trading on October 30, 2020, representing a cumulative gain of N2.75trillion or 21 per cent during the two months.
Similarly, NSE All-Share Index grew by 21 per cent or 5,203.56 basis points from 25,327.13 to 30.530.69 index points during the period under review.
Analysts at Cordros Capital reacting to the development said, “We expect the direction of market performance to be shaped by the ongoing 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 one per cent level, 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.”
The Director-General, Securities and Exchange Commission, Mr Lamido Yuguda, had pledged more accessibility to Nigerians in a bid to attract more investors.
Yuguda who spoke during an interview recently said this would help attract more retail investors to the capital market and ensure steady growth.
He said, “We need to make operations in the capital market as easy as possible. That way, we can attract investments.”
