New Telegraph

December 6, 2023

Oil and gas stocks record N91bn gain in HY’21

Oil and gas firms listed on the main and premium boards of the nation’s equity market reported gain of about N91.053 billion during the first half of the year 2021. Checks by New Telegraph revealed that the oil and gas sub-sector gained the N91.053 billion or 19.97 per cent to close at N546.976 billion in market capitalisation on June 30 in contrast to opening figure of N455.923 billion at the beginning of trading on January 2. Market watchers believe the investors are taking position on oil and gas stocks ease of lock down which has increased spending on transportation.

The consequences of the coronavirus (COVID-19) out-break had threatened the resilient outlook for Nigeria’s economy mainly supported by the oil and gas sector. Speaking on the outlook for the rest of the sector, David Adonri, Managing Director/ CEO, Highcap Securities Limited, has said: “If the results and dividends announced by major companies are impressive, and if the rally in crude oil price is sustained, and if yield on debt does not go higher, demand for equities may increase and stem the tide of decline.”

Ayodeji Ebo, Senior Economist/ Head, Research & Strategy, Greenwich Merchant Bank, said: “Rising fixed income yields will continue to suppress the performance of the equities market, however, influx of impressive financial performance and corporate actions will reduce the impact.

“Investors will cherry pick stocks with good fundamen-tals. However, as full year corporate actions releases wind down, we expect the equities market to dip presenting new entry opportunities.” On her part, the chief executive Officer, Emerging Africa Capital Group, Toyin Sanni, said: “There is likely going to be a rebound in the market as investors buy back at discounts and also position themselves to meet the closure of register deadlines for dividend payment which have been announced. “Listed companies are positioned to record positive performances in the first quarter of the year 2021 as the COVID-19 recovery kicks in and economic activities return to normal.

This could contribute to a significant uptrend in the market as a response. “However, if the yields in the money market and fixed income space continue to increase at their current pace, it could lead to outflow of funds from the stock market in the longer run, leading to a bearish performance. “The recent improvement in the rate environment in the USA could also lead to foreign capital flowing out of the Nigerian markets to a more stable environment.” On demand, analysts at Cordros Capital said: “We expect the resumption of full economic activities to continue supporting product demand. Specifically, we envisage improved demand from the manufacturing and transport sectors. For supply, we expect individual product sourcing to remain challenging for downstream players as structural issues such as FX illiquidity persist. Thus, we expect the NNPC to remain the sole market supplier until at least 2022, when the Dangote Refinery comes on stream”

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