Nigerian bourse still outperforms Kenya, S/Africa

Investors have remained bullish on Nigerian stocks with sound fundamentals which makes the bourse performance indicator to outperform that of two other major African bourses–Nairobi and Johannesburg stock exchanges.

The three stock markets benchmark indices show the Nigerian Stock Exchange (NSE) All-Share Index (ASI) records highest gain year-to-date (ytd) at +37.05percent as at Monday; Nairobi All Share (+16.56percent); and Johannesburg Stock Exchange Africa All Share index (+11.29 percent).

Analysts still positive

“We expect market performance to maintain its positive momentum, buoyed by anticipated release of third-quarter (Q3) 2017 earnings results. However, we advise investors stay bullish on stocks with sound fundamentals,” said research analysts at Lagos-based investment house, Afrinvest.

Amid record days of upward and downward price swings in the trading week to October 6, investors in Nigerian stock market saw the value of their investments rise further by over N280billion.

“With third-quarter (Q3) 2017 earnings already filtering into the system, we are of the view that the market may be set for another rally as the All Share Index ASI heads for the 38000 points mark again”, according to United Capital research analysts.

“Broadly reflecting performance across global equities so far in 2017, the local equities market opened the year surrounded by lots of economic uncertainties. The economy was battling recession, investor confidence had been shattered by inconsistent policy responses and militancy in the Niger-Delta region was threatening the future of a near-term recovery. As such, the equities market ended Q1-17 lower, down 5.1percent quarter-on-quarter (q/q).

“However, a sequence of positive developments changed this narrative in second-quarter (Q2) 2017 with broader index jumping 29.8percent q/q. The rally peaked in July when the All Share Index (ASI) crossed the 38000pts mark amid impressive first-half (H1)-17 earnings. This drove year-to-date (YtD) return above 40percent, corresponding our optimistic case for the year,” United Capital analysts noted.

These analysts believe investors sold the July rally in August and September, “as such, the ASI retreated to 35,439.98point to bring YtD return to 31.9percent at the end of Q3-17.”

Research analysts at another Lagos-based investment firm, FBNQuest who recalled that the Lagos bourse was still in negative territory year-to-date (ytd) in early May, said the surge was driven largely by the offshore investor’s response to Nigeria FX window for investors and exporters (NAFEX).

“The second-quarter (Q2) reporting season also brought some strong results from leading banks and non-banks. This surge in five months has not been a stampede,” they noted.

Iheanyi Nwachukwu