BUSINESSDAY’s
NIGERIA STOCKWATCH
Wealth-Building Stocks in 2020 and Outlook for 2021 • NSE Ytd 27.66 % • Increased liquidity drives stock investment. • Lockdown- driven data demand fuel ICT stock prices • Low priced stocks rising • Industrial stocks show strength
• Low valuation trigger entries • Agric stocks enjoying government policies •Manufacturing, trade not responding to government policies. • CBN interventions boost Healthcare stocks • Banks risk rise in NPL
Godfrey Obioma
and the resilient third quarter earnings of the big companies that are listed on the Nigerian Stock Exchange account for the big rally in November’. Further boosting interest in the equities market was the low interest rates in the money market; flight of foreign investors from the equities market and snapping of the offloaded shares by local investors; performance of public companies beyond expectations and dividend payments.
T
he equities market was dominated by the bulls for the greater part of 2020 with the All-share index climbing beyond 35,000 basis points. The index started the year strong closing at 29,183. 40 basis points January 31, 2020 declined to 21,330. 29 basis points March 30 at the peak of the Corona Virus. By May 29, it staged a rebound at 25,123.64 basis points, 30,530.69 points October 30 and 35,137.99 basis points on December 4, 2020 with year to date of 27.66 percent. Market capitalization followed the same trend at N14.86 trillion January 31 and N18.36 trillion on December 4, 2020. The bullish trend was fuelled by increased liquidity occasioned by the Federal Government spendings and CBN’s flexible monetary policies. With the low returns from fixed income market, illiquidity in the real estate market, depressed hospitability and manufacturing sectors, the equities market turned beautiful bride and a major beneficiary of a significant chunk of the huge funds circulating in the economy. Particularly, in November, the market recorded impressive rallies. Abiodun Keripe, Managing Director, Research, Afrinvest traced this to the low valuation and impressive Q3 results. According to Keripe, ‘the attractive valuation of the market with P/E ratio at 9.0x compared with 21.5x and 13.8x for South Africa and India respectively
MARKET DRIVERS Some of the stocks that attracted investors and helped to drive the market in 2020 are MTN Nigeria, Airtel, Dangote Cement, Lafarge Africa , Bua Cement, GTBank, Zenith Bank, Stanbic IBTC Bank, Nigerian Breweries, Dangote Sugar, Okomu Oil, Presco and Nestle. Others include Nestle, Conoil, FBN Holding, UBA, Access Bank, Flour Mills and NASCON. MTN Nigeria MTN traded at N119. 60 per share January 31, 2020, fell to N100.00 per share on March 26 at the beginning of the Corona Virus pandemic but quickly rose in May following the economic lockdown which triggered large scale data demand. By September, the stock price had risen to N124.00 per share. On December, it traded Continues on page 05