Equity Market Sees Renewed Optimism Amid Positive GDP Growth

Equity Market Responds to Positive GDP Growth

Nigeria’s equity market opened the week on a high note as investors responded positively to the latest economic data released by the National Bureau of Statistics (NBS).

The Q2 2024 Gross Domestic Product (GDP) report showed a 3.19% year-on-year growth, surpassing the 2.51% recorded in the same period last year and the 2.98% growth seen in Q1 2024.

Market Performance on Monday

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) rose from 95,973.45 points to 96,037.28 points at the close of trading on Monday, August 26, reflecting a slight increase in market capitalisation from N55.129 trillion to N55.165 trillion.

This 0.07% rise, equivalent to N36 billion, was driven by 9,075 deals that saw investors exchange 377,176,127 shares valued at N3.776 billion.

READ ALSO: Nigeria’s Equity Market Dips By 1.16% Amidst Profit-Taking, Bargain Hunting

Analysts Weigh In on Equity Market Trends

Market analysts have expressed cautious optimism regarding the future of the equity market, particularly in light of the positive GDP data.

“Expectations of improved GDP growth and easing inflation figures are likely to further bolster sentiment in the equities market,” said Meristem research analysts in a note to investors on August 26.

They also warned of potential profit-taking activities, particularly given the attractiveness of yields in the fixed income market.

Meristem analysts further noted, “This week, we anticipate the bulls to dominate the local bourse, driven by renewed buying interest. Stocks that have experienced significant declines now present attractive entry points for investors looking to position themselves strategically, particularly on banking tickers that have recently dipped.”

Key Stock Movements

The equity market saw significant movement in several key stocks on Monday. Eterna led the pack, rising from N21 to N23.10, a 10% increase.

Okomu Oil Palm also saw a notable increase, climbing from N345.30 to N379.80, adding N34.50 or 9.99%. RT Briscoe, Oando, and Japaul Gold also recorded gains, reflecting a general trend of optimism in the equity market.

Impact of Upcoming Financial Reports

Looking ahead, market participants are closely watching the upcoming release of audited financial results for the first half of 2024 from major banks.

“We expect that the release of banks’ audited H1’24 results and interim dividends announcements would dictate sentiments in the market,” said analysts from CardinalStone in their August 26 note.

Cautious Optimism in the Equity Market

Despite the positive outlook, some analysts are advising caution. “The equity market is expected to continue with mixed performance as investors adopt opportunistic investment strategies,” stated Lagos-based United Capital research.

United Capital analysts further explained, “Given the current trend of rates in the money/fixed income market, we expect some bearish undertone to persist in the equities market. However, the Bulls will remain incentivised to persist in bargain hunting, given the tremendous mid-long-term opportunities in the equities market.”

Investors and fund managers are encouraged to consider mid-long-term investment objectives, focusing on sound equities with strong fundamentals and ongoing corporate actions.

This strategy aims to optimise portfolio returns by capitalising on market opportunities.

As Nigeria’s equity market responds to positive GDP growth and anticipates further developments, investors are advised to approach the market with a mix of optimism and caution.

While opportunities abound, the interplay between economic data and market sentiment will continue to shape the equity market’s performance in the coming weeks.