Cross section of capital market stakeholders have called for restoration of market investor confidence , as the Nigerian Stock exchange(NSE) records great feat in market development and returns on investments.
The call was coming as the NSE has emerged as the world’s best performing market in terms of returns on investments in the month of June 2017, driven by the NSE Banking index and the NSE industrial index amongst others.
Latest review of June performances in global 16 selected stock markets across America, Europe, Africa and Asia by researchers from FSDH Merchant Bank, revealed that the NSE All-Share Index (ASI) recorded month on month (MoM) returns of 12.27 per cent, dwarfing all other global markets.
The NSE ASI recorded the highest MoM appreciation of 12.27 per cent to close at 33,117.48 points with YTD gains at 23.23 per cent as at June 30, 2017. This was followed by the Nairobi All Share Index (Kenya) with a MoM gain of 3.05 per cent and a YTD gain of 14.68 per cent.
The market capitalisation similarly recorded a MoM gain of 12.30 per cent (a gain of 12.14 per cent in US$) to close at N11.45 trillion ($37.44 billion).
The difference in the rate of change between the market capitalisation and the index was due to the addition of 396.79 million ordinary shares to the outstanding shares of Oando Plc on the NSE, following the conclusion of a debt to equity conversion exercise.
However, cross section of capital market stakeholders who spoke to Daily Times on condition of anonymity said that with the rate of returns of the NSE, the market is expected to boost its primary or ASeM segment of to enhance easy access of funds by companies through initial public offer.
Yes, our market recorded the highest rate of returns in JUNE, BUT our primary market still remains dormant over the years, indicating dearth of investor confidence. This needs to be reversed to take advantage of the growth trajectory” a senior stock broker said on condition of anonymity.
Meanwhile, the FSDH report further showed that the FTSE/JSE Africa All Share Index (South Africa) recorded the highest MoM loss of 3.64 per cent but recorded year to date (YTD) gain of 1.89 per cent. This was followed by the CAC 40 Index (France) with a MoM depreciation of 3.08 per cent but a YTD advancement by 5.31 per cent.
On the outlook for the month of July, the analysts noted “we expect to see some profit taking in the equity market in July 2017. However, we expect the overall performance of the equity market for July 2017 to be positive, especially if companies report strong Q2 June 2017 results.
The following factors may drive performance – the stability in the macroeconomic environment, strong Q2 results from quoted companies, improved sentiments towards the Nigerian economy, the sustained liquidity in the foreign exchange market, and any unexpected possible change in the MPC policy decision.
They recommended that investors should maintain a medium-to-long term position in stocks that have good fundamentals and that, “investors should also take strategic positions in interim dividend paying stocks. Building materials, food and beverages, agro-allied processing and banking stocks offer attractive returns.
According to the report, other market indices analysed were the Dow Jones Industrial
Average, which closed the month of June with a MoM appreciation of 1.62 per cent, the S&P 500 index was up 0.48 per cent. The Brazil stock market increased 0.30 per cent, Ghana’s ASI improved 2.34 per cent, Japan’s Nikkei 225 added 1.95 per cent, China’s Shanghai Stock Exchange Composite Index gained 2.41 per cent and Hong Kong’s Hang Send Index was up by 0.41 per cent MoM.
European stocks ended the month on a lower note with UK’s FTSE100 index down by 2.76 per cent posting the second biggest MoM loss after France. Germany was next with a MoM decline of 2.30 per cent while the Swiss Market Index closed negative at 1.22 per cent. Sandal Composite trailed with a MoM depreciation of 0.94 per cent and India’s S&P BSE Sensex Index completed the 16 list of analysed stock markets with a decline of 0.72 per cent.
The FSDH research analysts noted that improved macroeconomic environment, especially the increased supply of foreign exchange, which has resulted in buoyed investors’ sentiments, continues to have a positive impact on Nigeria’s equity market.
The analysts noted that market activities increased in the month of June 2017, compared with May 2017 while, “the volume of stocks traded increased by 7.49 per cent to N10.46 billion. Access Bank Plc and FBN Holdings Plc were the two most highly traded stocks in June 2017.
The value of stocks traded on the NSE in June 2017 also increased by 7.13 per cent to N110.14 billion. All the sectoral indices rose in June 2017, compared with May 2017 except the NSE Insurance Index, which declined by 0.56 per cent MoM.
The NSE Banking Index recorded the highest appreciation of 11 per cent, with a YTD appreciation of 45.08 per cent. The gain in the NSE Banking Index is mainly attributed to the increase in the share prices of Sterling Bank, UBA and Zenith Bank. The NSE Industrial Index recorded a MoM gain of 10.96 per cent with a YTD gain of 21.12 per cent.”