Investments on the Nigerian stocks market has soared by N896 billion in the month of April despite Coronavirus (Covid-19) pandemic.
The outbreak of Covid-19, which has become a full-blown pandemic, is restructuring the world economic order, disrupting traditional business models and testing the strength of even the most stable economies around the world.
As a result, organisations are modifying their business continue plans (BCPs) to contain the effect of the crisis, while, some are at the thinking phase, others are positioning to ahead of the post crisis era.
Capital market analysts noted that with the equities market performance in April showed that Nigerian funds are switching back to equities from fixed-income securities, hoping for a stock market rebound later in the year.
Coming from a loss position of 20.72 per cent in first quarter (Q1), January to March, the composite NSE All Share Index for the month of April gained 8.08 per cent to close at 23,021.01 points from the opening level of 21,300.47 points on April 1, 2020.
Similarly, market capitalisation for the period was up by N896 billion to close higher at N11.997 trillion on April 30, 2020, from an opening value of N11.101 trillion on April 1, 2020.
Sectoral analysis for the month as at April 24, 2020 showed positive performance except for NSE Oil and Gas and Industrial Goods indices which declined by 4.47 per cent and 2.20 per cent, respectively. The NSE Consumer Goods Index recorded the highest month-to-date as at April 24, 2020 return of 15.66 per cent.
The NSE Banking Index followed with a return of 10.89 per cent, while the NSE Premium Board Index rallied average gain of 10.28 per cent. The NSE 30 Index, which tracks the 30 most capitalised companies at the stock market, posted 7.27 per cent gain.
The NSE Pension Index appreciated by 5.41 per cent, Lotus II rose by 5.52 per cent, while the NSE Insurance Index posted a modest return of 0.80 per cent.
The Nigerian Stock Exchange (NSE) March 24, 2020 began remote trading as the Coronavirus Pandemic spreads. With this development, stocks trading on the Nigerian Bourse will be done by dealing members at the comfort of their homes, leveraging technology and this showed that trading was carried out remotely throughout the month of April.
According to a capital market analyst, Dr Timi Olubiyi, the performance of the stock market in the month of April 2020 was surprisingly positive this could be attributed to the release of good end-of-the-year financial results by some of the listed companies along with improved dividend declarations in recent time.
“However more importantly, the performance can equally be attributed to intelligent investors and smart traders taken advantage of the current low prices of blue chip and value stock on the Exchange.”
He added that given the high uncertainty around production and services, the crash in global oil prices, absence of positive market catalysts and the continued increase in the number of Covid-19 incidences in Nigeria a second recession in less than four years is likely and positive market performance is not sustainable.
He added further that especially if the spread of Covid-19 is not curtailed within a reasonable period, it might harm the performance of the NSE in the long run, saying that the current performance data is yet to take into full account the effects of the lockdown, restrictions and weak economic data in the country.
He however said that mixed trading session and high price volatility might be experienced going forward because the current situation is highly unsustainable without government and regulators intervention.
“In anticipation, adequate policy responses are expected from the government and regulators to cushion the effect of the pandemic, provide market succor and to deepen market participation so that the positive market performance can be sustained achieved,” he said.
A chartered stockbroker and chief executive officer, Sofunix Investment and Communications, Mr Sola Oni, said that “The Nigerian Stock Exchange has leveraged its robust technology to operate remote trading.
“This explains why transactions have been going on seamlessly despite the lockdown prompted by Covid-19 pandemic. Investors are taking advantage of underpriced stocks to beef up their portfolios. At the moment, the tier one banks are the one driving the market. This is probably due to impressive dividend yields that some of them declared after the year end results.”
According to Oni, the banks are already posting encouraging first quarter results. Although, performance of companies generally will reflect negative impact of Covid-19, banks operate unique business that every sector of the economy passes through them.
Their service is so vital at all seasons and many of them are already developing strategies to sustain profitability or significantly manage the impact of coronavirus pandemic. It may be difficult to conclude the extent to which the market can sustain positive outing after Covid-19, but if the issues affecting economy are properly managed, there is hope for the market.