(Greenwich Merchant Bank): The equities market finished 2020 with its best performance in a decade at least, after stock prices climbed higher for a third consecutive week. The All-Share Index crossed the 40,000 mark, with a gain of 3.8%, to 40,270.72pts, while the Market Capitalization rose 3.9% WoW to close at NGN21.06trn.
The record-high equity capitalization helped secure a gain of NGN8.1trn for investors, even as the broad market advanced +50.0% YTD.
In the week, market activities cooled off, with the volume of trades easing by 12.6% to an average of 602.1 million units valued at NGN8.7bn (-14.1% WoW). Also, NEM posted a 31.6% surge to NGN1.79, leading the gainers’ table.
Read: Total transaction on NSE rose by 84.2% YoY despite N433.15bn foreign outflow
We attribute the insurer’s performance to the activities of bargain-hunters. On the flip side, FTNCOCOA slid 25.8% to NGN0.66, to emerge the week’s top loser.
The WoW gain in the market was not broad-based when viewed on a sectorial front. For instance, the Industrial Goods sector advanced by a stunning +10.4%, compared to soft gains in the Insurance (+1.7%) and Oil & Gas (+0.2%) sectors. Meanwhile, the Banking (-0.6%) and Consumer Goods (-0.5%) indices tracked lower.
With Thursday as the last trading session for the year, the strong buying-interests post-Christmas break was enough to push the market return to a neck-breaking gain of 50.03% in 2020. As a result, the domestic bourse knocked off 2013’s YTD return of +47.2%, marking its best outing since 2010 at least.
In our view, the equity market found support on the accommodative stance of CBN, which improved system liquidity significantly and pressured fixed income yields to record lows.
Upon resumption from the new year break, we expect the market momentum to remain sturdy, as yields in the fixed income space remain at levels not supported by fundamentals. Albeit, we do not rule out the possibility of intermittent sell-offs, a characteristic of early trading sessions in a new year.
