Transactions at the Nigerian Exchange Limited (NGX) closed positively in July this year as earnings and dividend declaration from quoted companies boosted the local bourse’s market capitalization by N1.814 trillion.
The accretion to the market cap was also catalyzed by insider dealings among companies as directors and related parties consolidated their positions in their drive to convince investors about the inherent values of their stocks and the current positive reactions to the ongoing reforms by President Bola Tinubu-led administration.
In spite of the profit taking by many listed entities, selloffs and FX pressures recorded in the month, the benchmark NGX All-Share index which opened the month’s trading at 60,968.27 points, closed at 64,337.52 points, representing a 5.53% growth while year-to-date (YTD) close at 25% in the month under review.
Also, market capitalization- listed value of equities rose by N1.814 trillion from N33.197 trillion to N35.011 trillion.
A further analysis of the equities market’s performance in July reflected that there were also better-than-expected corporate earnings, higher dividend payouts and relatively improved liquidity as fixed income yields were not stable in the face of soaring inflation which supported buying interests in the market and flow of funds into the equity space.
It would be recalled that a total turnover of 2.854 billion shares worth N37.645 billion in 41,547 deals were traded by investors on the floor of the Exchange last week Friday.
The surge in the trading volume and mixed sentiment experienced during the month showed the buying interests by majority shareholders and activities of institutional investors as they sought to hedge against inflation on a mixed outlook for fixed income rates and yields.
Analysts also attributed the trend to the second quarter (Q2) performance of some quoted companies that beat inflation rate, raising hopes of better earnings that will support price and payout at the end of the financial year.
This is even as they projected that given the outcome of the Monetary Policy Committee’s (MPC’s) meeting in the month under review, the prevailing mixed economic data and as well more corporate earnings now looking up, positive earnings surprises and possible interim dividend declarations from companies would spur increased bargain-hunting activities on the bourse.
The experts also pointed out that the profit-taking activities on stocks that have experienced substantial appreciation might be possible.
For instance, analysts at Cordros Research projected that “in the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market.”
