As the Nigerian Stock Exchange (NSE) broad market index, NSEASI approaches the next psychologically important mark, a peek below the surface at major components show a few market leaders powering the rally. Nigerian stocks have gained 37 percent year to date and the All Share Index closed at 36,864.71 points on Friday. Stocks are looking to test and breakthrough the next major hurdle, which is the peak of 43,000 points reached in early July 2014. A look at the 30 largest stocks (NSSE-30) which account for up 95 percent of broad market capitalisation shows that a few names are driving the rally. Even as the broad market is yet to breach its 2014 peak, 12 stocks have already eclipsed their 2014 index highs, with one rallying to a flat position, while 17 names are still lagging the levels they were at the previous index highs of 2014, data compiled by BusinessDay show. Stocks that have outperformed today, releative to levels they were when the index was higher in 2014 are largely financials and consumer names and include GTB which closed at N41.10 per share on Friday, compared to N29.6 in 2014, Stanbic (N37.53 now /then N26.76), Access (N10.11 now/ then N9.19), Zenith (N25.90 now /then N25.1), International Breweries (N32 now / then N29.4), UBA (N9.81 now/ then N7.9), Okomu (N74.41 now/then N33), Total (N270 now/N171 then), Mobil (N253 now/N135 then), Presco (N73.20 now/ N37 then), ETI (N17 now/ N16.24 then) and Dangote Sugar (N10.86 now/N9.30 then). One other large cap blue chip, Nigerian Breweries, has clawed back losses to close at flat levels, compared to the 2014 index highs. “We suspect that there is new foreign investment interest in the Nigerian market, via Africa dedicated funds,” said Tajudeen Ibrahim, head of research at Lagos-based Chapel Hill Denham. “Usually, such funds buy good quality stocks with high trading liquidity in the banking and consumer sectors ahead of other stocks,” Ibrahim said in an emailed response. Total transactions at the nation’s bourse for the first half of the year (January to June) increased by 49.78 percent to N935.26 billion in 2017 from N624.41 billion recorded in 2016. Net Foreign inflows of N30.33 billion were positive for a third consecutive month in June, according to data from the bourse. Nigerian stocks have benefited from a number of catalysts, including decent first quarter results for banks, and the emergence of the Investor and Exporters FX window. The NSE banking index is the best performing sector this year to July 21 with a 54 percent gain, followed by the premium index (+36.2%), industrial goods (+33.65%) and consumer goods(+11%), data from the stock exchange show. As second quarter corporate earnings start to trickle in, investors and analysts are also expecting to hear from companies’ executives to confirm that solid results will continue to power the rally going forward. Nigeria’s largest listed firm, Dangote Cement reported half year group revenues of N412.68 billion, compared to N292.19 billion a year ago, while pre-tax profits was N155.58 billion versus N124.89 billion in 2016. The largest lender by assets, FBN Holdings, reported Half Year gross earnings that rose by 7.8 percent to N288.8 billion, and net income of N29.5 billion. Impairment charges declined by 10.7 percent to N62.4 billion, while FBNHs, non-performing loan NPL ratios declined to 22.8 percent in second quarter 2017 from 26 percent in the first quarter of 2017. Looking forward to the second half of the year, there should be more FX inflows via foreign investment, although the fixed income space may benefit more as investors wait to see stronger recovery in fundamentals, said Abiodun Keripe of Elixir Investment Partners Limited. “If the claim that FPIs were testing the waters in first half of the year is true, we can also expect some more inflows, provided macro fundamentals move from improving to stabilising,” Keripe said. Total foreign exchange inflows through the Central Bank of Nigeria (CBN) increased by 35.41 per cent in June 2017 compared with the previous month. Total outflows, on the other hand, decreased by 12.73 per cent during the same period. While market leaders like Guaranty Trust Bank (GTB),Stanbic and Nigerian Breweries continue to be the backbone of the expansion, some voices of caution however remain. “The Monetary Policy Committee however, noted the seeming bubble in the capital market and cautioned on the utilisation of the inflows,” the Governor of the Nigerian Central Bank, Godwin Emefiele warned this week. PATRICK ATUANYA & LOLADE AKINMURELE The post GTBank, Stanbic, UBA, others surpass 2014 highs appeared first on BusinessDay : News you can trust .
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