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Finance - January 10, 2022

How the Nigerian Stock Market Gained N1.33 Trillion in First Trading Week

As a result of the foreign and high-net-worth investors’ demand for high-profiled stocks, the Nigerian Exchange Group (NGX) gained N1.33 trillion in the first trading week.

The Nigerian stock market commenced the first trading week of 2022 with a rise of N1.33 trillion in market capitalisation. This positive outcome from the Nigerian Exchange Group (NGX) is a result of the foreign and high-net-worth investors’ demand for shares of Airtel Africa Plc, BUA Foods, Lafarge Africa Plc, and FBN Holdings Plc, which increased the stock market’s capitalisation to N23.628 trillion from N22.296 trillion on the first day of trading.

The demand for Airtel shares increased by 10% to close at N1,050.50, bargain hunting in BUA Foods increased by 9.9% to close at N53.20, Lafarge Africa increased by 7.7% to close at N25.80, and FBN Holdings increased by 4% to close at N11.85, all of which contributed to the weekly gain. 

Despite the fact that the federal government declared last Monday a public holiday to mark the New Year’s celebration, all other indices in the Nigerian stock market ended the first trading week higher, except for the NGX Premium which ended with 0.47%, NGX Insurance with 0.93%, NGX AFR Div Yield with 0.97%, NGX Meri Growth with 0.66%, NGX Consumer Goods with 0.87%, and NGX Lotus II Indices with 0.12%. 

Trading volume and value increased by 103.7% and 246.8%, indicating a high level of activity.

Meanwhile, investors on the trading floor of the Exchange transacted 2.027 billion shares worth N59.014 billion in 15,750 deals last week, compared to 995.361 million shares worth N13.209 billion in 10,264 deals the week before.

The Consumer Goods Industry (measured by volume) topped the activity chart, with 1.255 billion shares worth N51.973 billion moved in 2,581 transactions, accounting for 61.90% of total stock turnover volume and 88.07% of total equity turnover value.

With 537.959 million shares worth N4.627 billion traded in 8,015 transactions, the Financial Services Industry came in second. The ICT Industry came in third with a turnover of 76.906 million shares worth N704.346 million in 933 transactions.

Analysts at Cordros Capital believe that, “In the near term, we believe positioning for 2021 fiscal year (FY) dividends will continue to support buying activities in the market even as institutional investors continue to search for clues on the direction of yields in the financial institution (FI) market.

However, we advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings”. 

Analysts also feel that passing the 2022 budget early will be beneficial to the stock market. 

READ MORE: 5 Nigerian Platforms You Can Use to Invest in Stocks

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