Tales from African stock exchanges’ YTD performances

NSEASI averages $11.5m Nairobi $4.6m GSE 2.79bn Cedis

WITH A LACKLUSTRE PERFORMANCE in the All-Share Index of the Nigerian Stock Exchange, its year-to-date decline of -4.1 per cent is a little worse than the -0.1 per cent posted by its Nairobi (NSE20) counterpart, but way, way, in the shadows of the healthy 12.9 per cent gain recorded by Johannesburg All-share-Index.

The daily turnover on the Nigerian equities market has averaged $11.5 million year to date (using exchange rate at the Importers & Exporters window), compared with $12.9 million in the same period of 2020. In Nairobi, the year to date figure is as low as $4.6 million.

A comparative analysis of the Nigerian, Johannesburg and Ghana exchanges brings to the fore the forms of rallies seen in these bourses so far this year.

A recent report by Joy Business, Ghana revealed that the Ghana Stock Exchange (GSE) recorded a total of GH¢2.79 billion as investment returns during the first quarter of 2021, citing that the gains indicate a significant increase in the bourse’s market capitalisation of 57.16 billion Ghanaian Cedis.

According to details in the report, the momentous performance of the exchange can be attributed to the resilience of some equities on the market. Thus, by the close of the first three months of 2021, a total of 57.7 million shares, valued at 48.5 million Ghanaian Cedis were exchanged on the bourse and surpassing the record of the prior month.

On company performance on the exchange, telecommunications giant, MTN Ghana dominated trading activities with 91.8 per cent and 91.3 per cent of volume and value traded respectively as the stock gained 3.7 per cent in the first three months of 2021. Other firms trading on the stock exchange in Ghana that made some noteworthy gains in the first three months of 2021 were: Societe Generale, which gained 2.7 per cent, while Total Ghana gained 1.6 per cent and insurance firm, Enterprise Ghana Limited also joined the list and making a 1.4 per cent gain.

On the Ghana fixed income space in the month of March, the Ghanaian exchange recorded an unprecedented gain of 11.53 billion Cedis which was above the volume traded in the previous month. Meanwhile, market liquidity continued on a high note as government bonds accounted for 94 per cent of the volumes traded on the stock exchange.

In Nigeria, the Nigerian Stock Exchange, which is now known officially as the Nigerian Exchange Group (NGX) plc was dominated by bearish sentiments during the first three months of 2021, proving in all ramifications to be a difficult period for investors in the Nigerian equities market. In the period under review, the benchmark All-Share Index lost 3 per cent quarter-on-quarter to settle at 39,014.82 points below the 40,000 points psychological benchmark. Regardless of the bullish start at the beginning of the year, buying interest was stoked, driving the All Share Index by 5.3 per cent month on month in January.

Furthermore, in the Nigerian fixed income market there was a record of yields reversal both at the primary and secondary ends of the market which, in the meantime, raised concerns on the valuations of stocks as investors, who traditionally prefer less risky fixed-income space began reducing exposure to the equity market to a position at the short end of the money market. The selloffs significantly weighed on equities performance in February as the ASI shed 6.2 per cent month on month, the first monthly loss in eight months and the steepest monthly loss since the coronavirus-induced downturn in the first quarter of 2020.

However, the selloffs continued in March as the pace of reversal in yields picked up pace; though, companies had started publishing their FY-2020 financial results as well as declaring dividends. As a result, some of the decent financial results, as well as sturdy dividend yields, spurred buying interests in Nigerian equities towards the end of the month. It helped erase some of the losses already recorded during the month. Overall, the local bourse shed another 1.9 per cent, representing the first consecutive month on month loss in Nigerian equities since Mar-2020.

Although, the end of the first quarter saw the local equities market post a loss of over 3 per cent with investors losing over N800 billion in three months, driven largely by losses in the banking stocks, some of the best performing stocks during the period were found in the banking, consumer and industrial goods stocks, which saw a momentous performance, lifting the benchmark index and market cap despite waning investors’ sentiment.

Meanwhile, the outperformance of the Johannesburg exchange has several explanations with South Africa been easily the worst affected by COVID-19 on the continent. Whenever it is again open for business, therefore, investors are optimistic of a strong rebound for sectors such as tourism and transportation. Though, its bourse is also viewed by investors as closer to an advanced than a frontier economy, which is evident in its year to date performance.