How Q3 corporate earnings prompt N1.708trn equities gain in October

NGX, October

By Motolani Oseni

The Nigerian equities market gained N1.708 trillion in the month of October 2023 as investors reacted to better-than expected corporate results released on the Nigerian Exchange.

The month of October was eventful, marked by the influx of impressive corporate earnings reports at its peak. The better-than-expected corporate earnings despite the gloomy economy has impacted the market positively at a time the rising inflation has left fixed income market instrument in negative real returns.

These strong numbers came majorly from the service-oriented companies on the Exchange, cutting across Banking, Insurance, Energy, Power, Agribusiness, Construction and Aviation Service Companies.

The market capitalisation gained N1.708 trillion from N36.331 trillion at the beginning of the month to close at N38.039 trillion at the end of October 31, 2023. Similarly, the Nigerian Exchange (NGX) Limited All-Share Index (ASI) rose by 4.30 per cent from 66,382.14 points on September 29, 2023, to 69,236.19 points on October 31, 2023.

Also, sector performance was bullish as most indices closed the period on uptrend as of October 27, 2023. NGX Banking index appreciated the most by 5.27 per cent month-on-Month (M-o-M). NGX Industrial Goods index followed with a monthly gain of 3.35 per cent, while NGX Oil & Gas index rose by 2.38 per cent.

Others are NGX 30, NGX Consumer Goods and NGX Pension indices went up by 1.11 per cent, 1.06 per cent and 0.18 per cent respectively. On the other side, NGX Premium index, NGX Insurance and NGX Lotus II indices recorded monthly decline of 4.40 per cent, 4.24 per cent and 0.85 per cent respectively.

Recall that, on October 6, 2023, VFD Group Plc got listed on the Main Board of Nigerian Exchange Limited (NGX), adding over N45 billion to the market capitalization of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.

Speaking on market performance for October, the chief operating officer of InvestData Consulting Limited, Ambrose Omordion said: “trading on the Nigerian Exchange last month was buoyed by renewed buying interest after sell sentiments, which had pulled the market down in September, as more impressive corporate scorecards were made available to the investing public in the face of high volatility, increasing liquidity and macroeconomic headwinds.”

He stated that, many companies across various sectors posted impressive numbers, while some recorded mixed performance and others were disappointing.

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On market outlook, Omordion said: “we expect buying sentiments to continue as investors and bargain hunters react to the better-than-expected corporate numbers released so far. As more Q3 earnings reports are expected in the face of sector rotation. Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.”

He however said: “pullbacks are creating ‘buy’ opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment direction eventually.”

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