Business
NSE LIVE! Forex rules lift equities to N294b gain
Nigerian equities halted their three-day consecutive price depreciation on Wednesday as the release of the much-awaited framework for the implementation of the flexible foreign exchange (forex) policy of the Central Bank of Nigeria (CBN) spurred the stock market to a recovery.
The benchmark index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI), indicated average gain of 3.17 per cent, equivalent to a capital gain of N294 billion. The ASI spiraled to the month’s high of 27,891.96 points as against its opening index of 27,034.05 points. Aggregate market value of all quoted equities rose to N9.579 trillion as against its opening value of N9.285 trillion. With this, the average year-to-date return, though still negative, improved to -2.62 per cent.
Under the new flexible foreign exchange system, the CBN will merge all existing segments of foreign exchange market into a single “window”, which pricing will be determined by market forces with limited intervention from the apex bank. In essence, Naira will flow according to market forces with effect from Monday June 20.
Market analysts were unanimous that the release of the framework for the flexible forex policy was the main driver for the market. With 33 gainers to 10 losers, the market saw widespread price appreciation across the sector.
“Investments were largely stimulated by Central Bank’s clarification on its flexible foreign exchange policy which reduced uncertainty in the financial markets,” Cowry Asset Management stated.
“We expect the bullish sentiment to be sustained in the sessions ahead as domestic investors position in advance of the official take-off of the liberalized forex market on Monday which is expected to attract portfolio investors,” Afrinvest Securities stated.
All tracked group and sectoral indices at the Exchange closed on the upswing. The NSE Banking Index rose by 4.0 per cent. The NSE Industrial Goods Index appreciated by 2.8 per cent. The NSE Consumer Goods Index gained 2.4 per cent. The NSE Oil & Gas Index rose by 1.1 per cent while the NSE Insurance Index appreciated by 0.6 per cent.
Read also: NSE LIVE! High-cap stocks keep equities low
Dangote Cement, Nigeria’s most capitalised company, led the advancers with a gain of N8.20 to close at N172.20. Mobil Oil Nigeria followed with a gain of N7.99 to close at N169.50. Nigerian Breweries rose by N5.75 to close at N133.75. Guinness Nigeria added N4.90 to close at N102.90. Guaranty Trust Bank gathered N1.44 to close at N19.95 per share. Zenith Bank rose by 82 kobo to close at N15.77. Oando chalked up 33 kobo to close at N6.93. Dangote Sugar Refinery added 30 kobo to close at N6.63. United Bank for Africa (UBA) rose by 28 kobo to N4.60 while FBN Holdings gathered 24 kobo to close at N4.04 per share.
On the other hand, GlaxoSmithKline Consumer Nigeria and Ecobank Transnational Incorporated recorded the highest loss of 80 kobo each to close at N15.64 and N16.40 respectively. International Breweries dropped by 42 kobo to N19.48. Flour Mills of Nigeria lost 35 kobo to close at N21.50 while University Press declined by 22 kobo to close at N4.19 per share.
The momentum of activities at the Exchange also improved considerably. Turnover jumped above average to 588.42 million shares valued at N3.48 billion in 5,088 deals. UBA was the most active stock with a turnover of 197.20 million shares valued at N865.52 million. Skye Bank followed with a turnover of 74.55 million shares worth N87.97 million while FCMB Group placed third with a turnover of 54.49 million shares valued at N89.9 million.
Analysts at Afrinvest Securities said equities would continue on the upside noting that the moderation in forex risk, which hitherto had been obscuring valuation of assets in the economy, will unlock more value for equity investors, especially in banking and consumer goods sectors.
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