Top 10 Performing Stock in July

E kaaro o, Ututu Oma, Barka da Safiya - Good morning, and a warm welcome to ThinkBusiness Nigeria, your Monday – Friday dose of commentary, contexts, and insights on business and economic news that matter to you.

It’s been women’s weekend. Congratulations to the coach of the D’Tigress Rene Wakama and her team for defeating Senegal to retain the FIBA Afrobasket Championship in Kigali, Rwanda. Wakama became the first woman to win the competition as a coach since 1966, and that deserves a mention. This morning, the Nigerian women’s football team will face England in Brisbane. I have no doubt that they can beat England and let the celebration continue. They play 8.30am this morning, and they certainly have my best wishes.

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Markets

• The Nigerian equities market declined on Friday as the benchmark NGX All-Share Index (ASI) pared 64.98 (-0.1%) points to close at 65,198.08, representing a week gain of 0.22%, a 4-week gain of 3.42%, and an overall year-to-date gain of 27.21%. Eterna share price declined by 9.83%, followed by Meyer (-9.83%), Ikeja Hotel (-9.7%) and University Press (-9.24%).

• Oil prices rose more than a dollar a barrel on Friday to record a sixth consecutive week of gains, after top producers Saudi Arabia and Russia extended supply cuts through September. Brent crude futures rose US $1.10, or 1.3%, to settle at $86.24 a barrel, while the U.S. West Texas Intermediate crude gained US $1.27, or 1.6%, to close at US $82.82 a barrel. Both benchmarks hit their highest levels since mid-April on Friday.

• At the I & E window, Naira appreciated by 4.55%, closing at N743.07 against the US dollar. However, on the streets, Naira depreciated by 1.45%, reaching N877.5 against the US dollar. As the graph below shows, the gap between the two markets started to widen since 19^th July, taking only four weeks after reform for the emergence of significant disparity between the two rates. Both demand and supply are price inelastic, so the government must actively seek ways to improve supply and not leave it to the market.

• U.S. natural gas futures edged up about 1% on Friday on forecasts for the weather to remain hotter than normal through mid-August, keeping air conditioning demand extremely high, especially in Texas. That price increase came despite a decline in the amount of gas flowing to U.S. liquefied natural gas (LNG) export plants due to maintenance work.

Small Cap Stock dominated the top 10 performing Stocks in July

In July 2023, Nigerian Exchange Limited (NGX) had a highly positive trading month. The NGX All-Share Index surged by 5.5% to reach 64,337.52 index points and market capitalization closed at N35.011 trillion. This marked the best market return since 2017, despite concerns surrounding inflation and interest rates. Investor confidence remains strong. There is also a marked market activity by companies’ directors, showing confidence in the underlying value of these companies.

During the month, small-cap stocks dominated the list of top-performing stocks. Leading the way was Skyway Aviation Handling Company Plc, which achieved an impressive 152% gain, closing at N25.6 per share compared to N10.15 in the previous month. The company's market capitalization closed at N34.65 billion by the end of July 2023. Following closely, GoldBrew recorded a 93% increase, closing at N3.22 per share from N1.67 in June, with a market capitalization of N3.30 billion at the end of the month. Another notable performer was John Holt Plc, which closed July 2023 at N2 per share, experiencing a 92% appreciation from the N1.04 recorded in June. The company's market capitalization stood at N778.30 million at the end of July.

Deap Capital Management & Trust Plc and E-Tranzact International Plc were the last two companies on the list. Both companies closed July 2023 at N10 per share, representing a 55% appreciation from the N6.45 recorded in June. Each of these companies concluded the month with a market capitalization of N92 billion. Overall, July 2023 showcased a robust and buoyant performance in the Nigerian stock market, with various factors contributing to the significant gains observed during the month.

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National Headlines

• Power generation licences – The federal government has announced the approval of two additional power generation licences. When completed, the combined capacity of the licences will have 723MW. It follows the groundbreaking ceremony of the construction of the first phase of the 350MW Gwagwalada Integrated Power Project, Abuja. Meanwhile, power generation on the national grid is still about 4000MW. But the President has said that his administration will address all the obstacles to improved power supply in the country.

• Africa Women Basketball Champions – Weekend, Nigeria’s women basketball team D’Tigress defeated Senegal to retain the FIBA Afrobasket Championship in Kigali, Rwanda. The D’Tigress have now won the competition four times in a row. The coach Rena Wakama became the first female coach to win the competition since it started in 1966. Meanwhile, Nigeria will play England this morning at Brisbane, Australia at the ongoing women’s world cup.

Global Headlines

• The latest in Niger – Over the weekend, the Nigerien military forces that took over in July 26 coup shut the country’s airspace until further notice. It follows the expiration of the 7-day ultimatum given by ECOWAS that the democratically elected president Mohamed Bazoum be reinstated. It also follows the refusal of the Nigerian Senate to back the President on any act of war against Niger and the cutting off electricity to the country by Nigeria. As expected, food prices have soared since the coup. Meanwhile, President Bola Tinubu met with all the governors of the States bordering Niger on Sunday – Ahmed Aliyu (Sokoto), Umar Namadi (Jigawa), Mai Malam Buni (Yobe), Idris Naisr (Kebbi) and Diko Radda (Katsina).

• Oil prices rising – As mentioned above, oil price rose on Friday to record six consecutive weeks up. It has ramifications for the global economy, and it now does for ordinary Nigerians as well. In the past, oil prices only mean direct increases in government revenues, though oil theft and weak investments in the past means that the government has not optimized the opportunities. Now, it also directly means increases in the fuel price at the pumps. Currently trading at US $86 per barrel and the expectation that it may reach US $100 before year end, will put pressure on Nigerians and the government, especially in the face of a weakening Naira.

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This Week

• United State will release its inflation rate for the month of July on Thursday, August 10, 2023. The annual inflation rate in the US slowed to 3% in June of 2023, the lowest since March of 2021 and compared to 4% in May and expectations of 3.1%

• On Friday 11^th July 2023, the United Kingdom will release its GDP data for second quarter 2023. Britain's quarterly economic growth was confirmed at 0.1 percent in the first quarter of 2023, remaining unchanged from the previous three-month period. Analysts expects that the GDP rate for Q2 might be 0.1%.