Nigeria equities sustain bullish run on H1'23 banks’ earnings

The Nigerian equities market continues to maintain a positive momentum following the strong performance driven by half-year earnings of some tier one banks. Ngozi Odum, Equity Research Analyst at Cardinalstone Securities, highlighted the significant contribution of banking stocks to the equities market turnover, with about 66.7% being attributed to them. The bullish run is fueled by the impressive earnings reported by the banks in the first half of the year, setting an optimistic tone for investors. As the market eagerly awaits the release of Axis Bank's financial reports by the end of the month, experts like Ngozi Odum are closely monitoring the overall market dynamics. The recent trend in the market has been largely positive, with successive weeks of gains overshadowing a minor decline of 1% observed last week. The positive performance can be attributed to several factors, including exciting market disclosures and robust earnings from the banking sector. The string of financial results from tier one banks has been a key driver of the market's upward trajectory. Banks have reported substantial foreign exchange (FX) revaluation gains, meeting investors' expectations and generating significant interest in banking stocks. Additionally, the anticipation of generous dividend payouts further fueled market activity, with an increase in interim dividends announced by banks. Amidst market activity, notable events such as Fidelity Bank's acquisition of Union Bank UK and the Central Bank of Nigeria's caution regarding the use of FX revaluation gains as buffers have also influenced market sentiment. The upcoming confirmation of the new CBN governor, Godwin Emefiele, by the Senate is expected to usher in policy changes that could impact market dynamics positively. In response to the recent policy directive requiring banks to retain FX revaluation gains, market reactions were evident in the form of declines in the banking sector. However, the alignment of monetary and fiscal policies under the new CBN leadership is viewed favorably by investors, fostering optimism and positive market sentiments. Looking ahead, market participants anticipate a positive close for September, with gains being recorded throughout the month, barring occasional fluctuations. Factors such as exciting market disclosures, strategic acquisitions, and increased investor interest in specific stocks are expected to drive market performance in the remaining months of the year. The ongoing interplay between bulls and bears is considered a natural part of the market dynamics, with the prevailing bullish trend indicating investor confidence and market resilience. As the equities market continues to exhibit resilience and positive momentum, stakeholders, analysts, and investors remain vigilant for market developments and policy implications that could shape future outcomes. The outlook remains cautiously optimistic, with a focus on key market drivers and potential opportunities for growth and stability in Nigeria's equities market.