Stock market gains N437bn on dividend declaration

The announcement of dividends for the 2024 financial year by corporates reversed the downward trend recorded on the Nigerian Exchange to deliver a N437bn gain to investors.

In the past week, several financial institutions released their audited reports for 2024, showcasing strong performances and attractive dividend declarations. Additionally, analysts say that quarter-end portfolio rebalancing and window-dressing activities contributed to the bullish sentiment, lifting investor confidence on the local bourse.

At the end of the week, the NGX All-Share Index and market capitalisation appreciated by 0.66 per cent to close the week at 105,660.64 and N66.26tn, respectively.

Similarly, all other indices finished higher except NGX Oil/Gas and NGX Commodity Indices, which depreciated by 1.65 per cent and 0.76 per cent respectively, while the NGX AseM index closed flat.

The NGX Banking Index emerged as the top-performing sector, advancing by 4.28 per cent week-on-week, supported by investor accumulation of banking stocks such as Guaranty Trust Holding Company, FCMB Group, Fidelity Bank and First HoldCo.

The NGX Insurance Index followed closely, gaining 3.21 per cent, while the NGX Consumer Goods and NGX Industrial indices edged up by 0.12 per cent and 0.01 per cent, respectively, driven by price appreciation in stocks like Mutual Benefits Assurance, SUNU Assurance, Champion Brewery, Ikeja Hotel and UPDC.

With the bulls dominating three out of five trading sessions, the year-to-date return for the ASI improved, reflecting renewed optimism among investors. Market participation remained robust, as evidenced by a positive market breadth of 1.19 times, with 43 stocks advancing, outpacing 36 decliners.

Trading activity also experienced a sharp increase, with the total number of transactions rising by 7.48 per cent week-on-week to 61,309 deals. Similarly, the volume of shares traded saw a 159.2 per cent jump to 7.52 billion units, while the total value of traded equities soared by an astounding 730.04 per cent to N398.95bn.

The heightened market activity was largely driven by increased institutional participation and repositioning in anticipation of dividend payouts.

The industrial goods in terms of volume led the activity chart with 4.923 billion shares valued at N331.99bn traded in 2,969 deals, thus contributing 65.46 per cent and 83.22 per cent to the total equity turnover volume and value, respectively.

The financial services industry followed with 2.092 billion shares worth N31.74bn in 32,421 deals. In third place was the services industry, with a turnover of 198.775 million shares worth N788,67m in 3,450 deals.

Trading in the top three equities, namely Lafarge Africa Plc, Sovereign Trust Insurance Plc and Cutix Plc, accounted for 5.546 billion shares worth N332.38bn in 1,300 deals, contributing 73.73 per cent and 83.31 per cent to the total equity turnover volume and value, respectively.

Conversely, some stocks faced steep declines as investors booked profits or exited positions. Africa Prudential Plc was the worst-performing stock of the week, shedding 60.45 per cent, while CWG declined by 11.11 per cent, John Holt dropped by 10.0 per cent, UH Real Estate Investment Trust fell by 9.9 per cent, and United Capital lost 9.8 per cent.

Analysts at Cowry Assets Management Limited expect the bullish trend to persist as the market fully enters the earnings season, with dividend announcements likely to sustain investor interest in blue-chip stocks.

“However, portfolio rebalancing activities and profit-taking could introduce some volatility as investors assess corporate earnings results and macroeconomic data. Against this backdrop, we continue to advise investors to focus on fundamentally strong stocks with consistent earnings growth and resilient business models, ensuring sustainable long-term value creation,” read their weekly report.