NGX Breaks Out 98,000 Psychological Line Amid Interests In Insurance Stocks, Positive Market Internals

Post Views: 101

The All-Share Index (ASI) of the Nigerian Exchange Limited increased by 0.72% in the week ended December 6, 2024, after closing north in three trading sessions and down for remaining two. The index closed at 98,175 basis points, while market capitalisation touched ₦59.53tr, reflecting strong investor sentiment. The week’s positive performance was particularly driven by the Insurance, Oil & Gas, and Industrial Goods sectors. While the insurance index surged by robust 10.5%, fueled by gains in Sunu Assurances and Lasaco Assurance, the Oil & Gas Index rose by 4.84%, supported by the sustained strength in global oil prices. The Banking Index also gained 1.3%, backed by positive performances from Access Holdings and Fidelity Bank.

Golden Breweries Weekly Chart

Weekly trading volume saw a slight decline to 3.13bn shares, from previous week’s 3.19bn, yet investor interest remained high in major stocks. Notable gains were seen in Golden Guinea Breweries and Lafarge Africa, which experienced significant price increases at a time the core investor announced plans to sell its entire holding to Chinese investors.

Among top gainers for the week, Golden Guinea Breweries led with a significant 45.95% price appreciation, closing at ₦5.40 each, driven by heightened investor interest in its shares as the company saw a strong demand for its products. Sunu Assurances Nigeria followed with a 29.49% rise to closed at ₦5.05 per share, benefiting from a robust sector performance and increased investor confidence, particularly in the insurance space. Lafarge Africa, a leading cement manufacturer, gained 27.59% at ₦74.00 apiece, as it capitalised on the ongoing demand in the construction sector, reflecting solid growth in infrastructure projects. Secure Electronic Technology, a player in the electronic transaction services sector, saw a 27.27% increase to closed at ₦0.70, with investors reacting positively to the company’s innovations in the digital payments space. Cornerstone Insurance also performed well, rising by 25.00%, at ₦3.20, as investor sentiment surrounding the insurance sector remained optimistic, following a strong quarter for the company.

Learn Africa Weekly Chart

On the flip side, the week saw some losses, with Learn Africa PLC led the decliners after shedding 11.75% to closed at ₦2.93 each. This decline was likely due to a reduction in demand for educational materials, a sector that has faced challenges in recent months. Aradel Holdings suffered a 10.06% decline at ₦465.00 each owing to market pressures, particularly as its diversified holdings faced volatility in some of its key investments. e-Tranzact International, a fintech company, saw a 10.00% drop, at ₦6.75 per share, in line with a broader downturn in the tech sector, especially fintech companies, as regulatory challenges and market competition took a toll. Red Star Express, a logistics and courier services company, also fell by 10.00%, closing at ₦4.41 per share, likely influenced by intense competition particularly from small competitors, and rising operational costs in the logistics sector. John Holt, a conglomerate involved in trading and engineering services, rounded out the top losers with a 9.98% drop as it closed at ₦8.03, on a declining investor sentiment and broader market pullback in the conglomerates sector.

Looking ahead, the market is expected to remain relatively stable with cautious optimism, as analysts predict that the ASI could potentially surpass the 99,000 mark if momentum continues in key sectors. Investor sentiment remains largely positive, particularly if large-cap stocks in the oil & gas and banking sectors continue their strong performances. Favourable macroeconomic indicators and ongoing policy reforms in the financial sector are expected to further support the market’s positive outlook. The recent Strength in the exchange rate a great strength that signals to investors that the market is ripe enough to have them in.

Trending in the Economy

The Nigerian government’s $2.2bn Eurobond issuance aimed at addressing its fiscal deficit, saw an over-subscription with total bids exceeding $9bn, though only $2.2bn was allotted. Such strong over-subscription highlights a measure of investor confidence, despite concerns over the high yields for the two bond tenors, which could affect the country’s financial stability. The over-subscription also had a temporary effect on the exchange rate. Meanwhile, Nigeria’s total trade exports for the first half of 2024 reached N38.5tr ($24bn).

The Nasdaq and the S&P 500 surged higher on Friday as U.S. jobs data fueled expectations the Federal Reserve would cut interest rates by 25 basis points at its Dec. 17-18 policy meeting.The U.S. Labor Department report showed job growth surged in November, but an increase in the unemployment rate to 4.2% pointed to an easing labor market.

For the week, the Nasdaq gained 3.3%closing at 19,859.77, the S&P 500 rose about 1% closing at 6,090.27 and the Dow fell 0.6% to close 44,642.52. However, the S&P 500 registered its 57th record closing high for 2024, while the Nasdaq Composite posted its 36th record high close for the year. European markets ended the week on a positive note, driven by hopes of easier monetary policy from the ECB. The pan-European STOXX 600 index rose 2.00%, with major European stock indexes also gaining ground. While some economic indicators showed improvement, concerns about political instability in France and a potential economic slowdown persist.

Brent crude oil prices fell during the week ending December 6th, 2024. This decline was mainly due to concerns about oversupply in 2025 and weak global demand. OPEC+ extended production cuts to stabilise the market, but these measures were not enough to offset the bearish sentiment. As of December 6th, 2024, Brent crude oil was trading around $65 per barrel, down approximately 7.76% from the beginning of the year.

NGXASI Weekly Index Chart (Opening chart)

Technicals: The stock market is the barometer of every economy. It shows the true picture of what is happening therein. The market is seriously recovering from the decline it registered some weeks back and our forecast was that the market would close above the 98,000bps psychological line which it is currently trading above. The market has broken the T-Line( 8-Day Moving Average) signaling the availability of funds and show of investor confidence.

What recently happened in the Eurobond market which saw an over-subscription of $9bn will soon hit the equities space. The Naira’s recent strength and projected stability will draw the attention of global investors which will have a long-term effect in the equities sector. The money flow reading of 52.68 is a show of strength that the market is revamping backed up with the MACD trading above the signal line ( An indication of an uptrend). The market is above to break a very strong resistance point at 98,300 points, a break out will project the market into the 98,000 points ( Recovering the loses registered between 28/10/2024-06/11/2024). Investors should look out for fundamentally sounds stock to back up with the current strong technicals.

NGX Banking Index Weekly Chart