Impressive Earnings Boost NGX Market Capitalisation By N1.8tr In July

Transactions on the Nigerian Exchange Limited (NGX) closed the positive in the month of July 2023 as earnings and dividend declarations from quoted companies lifted market capitalisation by N1.814tr, supported by insider dealings among companies directors and related parties who consolidated their positions, as a mark of confidence in the inherent values of such companies.
There were also the sustained positive reactions to the ongoing reforms by President Bola Tinubu during the period, all of which blurred the impact of the profit taking, selloffs and FX pressures witnessed.
Specifically, the benchmark NGX All-Share index which opened the trading month at 60,968.27 points, closed at 64,337.52 points, representing a 25.53% growth, while market capitalization (cumulative value of listed equities) rose by N1.814 tr from N33.197tr to N35.011tr.
There were also the better-than-expected corporate earnings, higher dividend payouts and relatively improved liquidity as fixed incomes 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.
Recall that a total of 2.854 billion shares worth N37.645bn were traded in 41,547 deals by investors on 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 mixed outlook for fixed income rates and yields.
This followed the fact that second quarter (Q2) performance of some quoted companies beat 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 the profit-taking activities on stocks that have experienced substantial appreciation might like 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”.