The Nigerian Stock Exchange (NSE) has enjoyed significantly rallies in recent weeks, even amidst the global Coronavirus (Covid-19) pandemic.
Amid this positive, investors are advised to adopt portfolio diversification when investing in the capital market to manage risks across asset classes and smooth out the returns of the investment portfolio as a whole
As the Exchange sustains remote trading, free flow of information and vibrant market activity, the index has accelerated +16.39percent in the past month and ranks second, after Argentina, in Bloomberg’s best performing indexes within the period.
Total Market capitalisation at the NSE now stands at N12.6trillion as at May 7, 2020.
Several factors have been identified as the reason for this rally, including oil price recovery, the gradual easing of the lockdown in several economies, and the expectation of dividend payments attracting investors to blue chip stocks.
The NSE is, therefore, set to end the week on a positive note with the All Share Index up +5.79percent week-to-date. Sectors that have enjoyed significant attention at this time include banking, industrial and consumer goods sectors.
Furthermore, activity in the equities market has largely been driven by local investors.
Analysts have attributed this largely to cheap valuations amidst elevated system liquidity driven by maturities from OMO bills and low yields on fixed income securities.
“In Nigeria, attractive dividend yield, improved outlook on crude oil prices following OPEC+ deal, and the low interest rate on Treasury bills, fuelled renewed interest in the stock market”, according to United Capital research analysts.
Amid this positive, investors are advised to adopt portfolio diversification when investing in the capital market to manage risks across asset classes and smooth out the returns of the investment portfolio as a whole.