Equity trading on the Nigerian Exchange Limited (NGX) finished the first month of the year (January) in the green territory as the NGX All-Share Index appreciated by 3.88% to close the final trading day with 53,238.67 index points.
Despite the rising inflation, interest rate hike, and naira redesign, equity investors increased their buying pressures on an expected impressive full-year 2022 corporate earnings results.
Market performance: Available statistics showed that the All-Share Index opened the trading year at 51,251.06 indexes on January 4, 2023. It then closed the month at 53.238.67 points, gaining 1,987.61 basis points or 3.88%.
Further analysis revealed that activities on the Nigerian Exchange Limited (NGX) which opened the trading year at N27.915 trillion in market capitalisation at the beginning of trading, closed on January 31st 2023 at N28.997 trillion, hence has earned a year-to-date gain of about N1.082 trillion.
Market analysts believed the renewed sentiment in the local bourse market had also grown following crave to increase capital gains on the back of low prices of stocks owing to upset in the financial market arising unstable policies and building up to the 2023 general elections.
Price adjustment: The Managing Director of Crane Securities Limited Mr Mike Eze, said that the price adjustment mechanism that the market is currently experiencing will continue during the first quarter of 2023. He added that it will make the market attractive.
Mr Eze explained that most results particularly the banking results would come in the first quarter and investors interested in dividends will swoop on the stocks.
He added that it is likely that investors will take a position to reap the dividend these companies will declare during the quarter.
Expected political impact: He noted that politics will also affect the prices of stocks as politicians and institutional investors who may be sponsors of elective positions will offload early in January to have cash for their campaigns.
- Some astute investors are waiting to take advantage of this opportunity.
Foreign investors: Eze further noted that panic sales on the part of the foreign investor will also be witnessed, as most of them will sell and run back to their countries because of election jitters.
- “But if the elections are conducted on a free and fair basis, stability will return after the election and these investors will embrace the market again,” he said.
Full-year results expectation: Meanwhile, Analysts at Cordros Securities Limited said that they continue to expect investors to position for 2022 full-year results ahead of upbeat corporate earnings and re-investment of dividends to drive bullish sentiments in Q1, 2023.
- “Nevertheless, in the latter part of the year, we believe that market sentiments will be shaped by a combination of the outcome of the 2023 elections, market-friendly policy or reforms, the direction of monetary policy, and impact on fixed income yields, sector-specific events and the weak macroeconomic environment,” they said.
