Oil and gas stocks gain N90bn in 4 months on sector’s positive outlook
Oil and gas firms listed on the main and premium boards of the nation’s equities market reported a gain of about N89.99 billion during the first four months of 2021.
Checks revealed that the oil and gas sub-sector gained the N89.99 billion or 19.74 per cent to close at N545.913 billion in market capitalisation on April 30 in contrast to opening figure of N455.923 billion at the begin-ning 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 COVID-19 outbreak 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, had 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 fundamentals.
“However, as full year corporate actions releases wind down, we expect the equities market to dip presenting new entry opportunities.
“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.”
