Nigerian Stocks Post Strong Performance Amid Market Losses

Despite overall market losses of ₦784.72 billion from April 19-26, 2024, several Nigerian stocks, including GTCO, UBA, Fidelity Bank, and Lafarge, have posted strong performances.

The changing market momentum, sentiments, and fundamentals signaled a downturn underway, with corrective waves and pullbacks on the daily and weekly NGX chart, as well as corporate earnings and dividend announcements.

The corrective wave on the Nigerian Exchange slowed down on Thursday, April 25, amid buying sentiments in some major sectors. Key companies like Zenith Bank, Transcorp, and Guaranty Trust Holding Company Plc reported strong financial results, providing reasons for investors to cheer.

The Nigerian naira has also been volatile, falling to ₦1,400 against the US dollar on the parallel market. Foreign investors have been returning to the Nigerian stock market after a period of dollar shortages.

The market has seen declines, with stocks like Transcorp Hotels, Honeywell Flour Mills, FBN Holding, and Oando among the major decliners. However, investor interest in banking, insurance, and industrial goods stocks has also driven the market higher at times.

Why this matters: The performance of the Nigerian stock market and key stocks like GTCO, UBA, Fidelity Bank, and Lafarge amid overall market losses highlights the resilience and potential of certain sectors and companies in the face of economic challenges. The return of foreign investors and the strong financial results reported by major companies provide a glimmer of hope for the Nigerian economy and its financial markets.

The Financial Services Industry dominated the trading activity, contributing over 60% to the total equity turnover. Nigerian Breweries Plc plans to raise ₦600 billion through a rights issue to clear its foreign exchange debt, while Fidelity Bank's total assets have reached a 13-year high.

The Lagos Commodities and Futures Exchange aims to start trading crude oil and gas on its exchange, and a company plans to raise up to ₦150 billion via a Rights Issue or offer for subscription to support ongoing working capital needs and organic growth funding.

Guaranty Trust Holding Company Plc (GTCO), a major Nigerian stock, has been performing strongly despite overall market losses. GTCO is a dividend-paying company with a current yield of 9.01%, which is well covered by its earnings. The company has maintained stable and growing dividends over the past 10 years, with its dividend payout being higher than the bottom 25% of dividend payers in the Nigerian market.

Key Takeaways

• Despite overall market losses, some Nigerian stocks like GTCO, UBA, Fidelity performed well.
• The Nigerian naira fell to ₦1,400 against the US dollar, but foreign investors returned to the market.
• The Financial Services Industry dominated trading, contributing over 60% to total equity turnover.
• GTCO is a dividend-paying company with a 9.01% yield, higher than 25% of Nigerian dividend payers.
• A company plans to raise up to ₦150 billion via a Rights Issue to support growth funding.