Transactions at Nigerian Exchange Limited (NGX) closed the month of July 2023 on a positive note as earnings and dividend declarations from quoted companies helped NGX’s market cap to gain N1.814 trillion.
The gain was also supported by insider dealings among companies as directors and related parties consolidated their positions in a show by such investors of their belief in the inherent values of such companies, as well as sustained positive reactions to the ongoing reforms by President Bola Tinubu.
Despite the profit taking, selloffs and FX pressures witnessed within the period, the benchmark NGX All-Share index which opened the trading month at 60,968.27 points, closed at 64,337.52 points, representing a 5.53 per cent growth while year-to-date (YTD) close at 25 per cent in the month under review.
Also, market capitalization- listed value of equities rose by N1.814 trillion from N33.197 trillion to N35.011 trillion.
There were also better-than-expected corporate earnings, higher dividend payouts and relatively improved liquidity as fixed income yields were not stable in the face of soaring inflation which supported buying interests in the market and flow of funds into the equity space.
It will be recalled that a total turnover of 2.854 billion shares worth N37.645 billion in 41,547 deals was traded by investors on the floor of the Exchange last week Friday. The high traded volume and mixed sentiment experienced during the month reflected the buying interests by majority shareholders and activities of institutional investors as they sought to hedge against inflation on a mixed outlook for fixed income rates and yields.
This followed the fact that the second quarter (Q2) performance of some quoted companies beat the inflation rate, raising hopes of better earnings that will support price and payout at the end of the financial year.
Given the outcome of the Monetary Policy Committee meeting in the month under review, the prevailing mixed economic data and as well more corporate earnings now looking up, analysts believe that positive earnings surprises and possible interim dividend declarations from companies would spur increased bargain-hunting activities on the bourse.
They also added that profit-taking activities on stocks that have experienced substantial appreciation might be possible.
Analysts at Cordros Research said, “In the medium term, we expect investors’ sentiments to be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income market”.
