For the first time in a very long while, and after months of bear-run, the benchmark All-Share index of the Nigerian Stock Exchange (NSE) on Thursday, soared 1.91% to 26,843.11 basis points, as the nation’s equity market recovered from a deep slumber as the fixed income instruments increasingly become less attractive, bringing it to a five-week as local investors struggled to guaranty good returns after being shut out of a treasury auction. Market capitalization jumped N245.434bn to N13.067tr, also representing 1.91%.
In a note to clients, midway into the day’s trading, AbdulRasheed Momoh, equities analyst and stockbroker at TRW Stockbrokers Ltd, likened the upward movement in Thursday’s NSE index to “thick smoke and occasional magma spewing just before the grand eruption occurs.
“I think we are seeing the smoke and magma coming out of the stock market now and that the bulls may just erupt without warning,” he added.
The central bank last month barred local investors from participating in its Treasury bill auctions, in a bid to draw more foreign interest to boost dollar liquidity and prop up the Naira.
Thursday’s rebound resulted from gains in high dividend-yielding banking stocks, which ensured the market posted its best daily performance since May 28, 2019, just as the month-to-date return flipped positive at 1.85%, while the year-to-date loss improved to 14.60% from 16%.
All sector indices closed in the green, with the banking index leading the pack with climbing 7.04% notch, followed by the Insurance, 1.96%; Industrial Goods, +1.24%; Consumer Goods, 0.98%; and Oil & Gas, 0.92%.
While Access Bank notched 9.64% or 95 kobo, closing at N10.80 each, up 43% year to date; Zenith Bank climbed N1.35 or 7.58%, closing at N19.15; Guaranty Trust Bank’s shares rose N1.90 or 6.79% to N29.90. Guinness Nigeria closed N2.30 or 9.70% up; just as Dangote Sugar Refinery gained 95 kobo or 9.55%.
According to Reuters, quoting traders, the Central Bank of Nigeria (CBN) auctioned N300bn worth of open market securities, but “had to seek alternative places to park their money,” after shutting local investors out of the sale for the second time since the ban was introduced.
One fund manager, who said he had been investing in cash and bank deposits since the CBN announcement, told Reuters he thought the treasury auction ban could be relaxed soon as excess liquidity affects the markets.