The equities market of the Nigerian Exchange Limited (NGX) has appreciated by 41.24 percent Year-till-Date performance to basis points as investors continued to take positions in some listed fundamental companies.
The equities market growth is on the backdrop of the Central Bank of Nigeria (CBN) foreign exchange unification, Pension Fund Administration (PFA) investment in the equities market, and impressive corporate earnings such as listed banks, and petroleum marketing companies, among others.
The equities market as of the closing of transactions on December 15, 2023, closed with an NGX All-Share index of 72,389.23 basis points, gaining 41.24 percent YtD from 51,251.06 basis points when it opened for trading.
Analysts have expressed that the bold economic reforms of the new government have lifted market capitalisation to N39.613 trillion as of December 15, 2023, representing an increase of 41.91 percent or N11.7 trillion from N27.915 trillion when the stock market closed for trading in 2022.
The 41.24 percent YtD return by investors is coming on the backdrop of a double-digit inflation rate, insecurity, tension, and a change in government, among other macroeconomic challenges and global uncertainty.
Since the beginning of the year, the stock market segment of the Exchange has witnessed an unprecedented rally and buying interest, especially in the Banking and Oil & gas sub-sectors which have continued to trigger massive bargain hunting in fundamental stocks such as Dangote Cement Plc, MTN Nigeria Communication, BUA Foods Plc, Zenith Bank Plc, Guaranty Trust Holding Plc, among others.
This has pushed the key performance indices and stimulated activities in the market, a development that has led to the rating of the stock market as one of the best-performing markets in Africa.
The All-Share Index, an index that tracks the general market movement of all listed stocks on the Exchange, including those listed on the Growth Board, regardless of capitalisation crossed the 72,000 mark in December.
The new listing on the Exchange played a significant role in the NGX ASI all-time high record as the stock market continued on a positive trajectory under President Bola Tinubu’s economic reforms.
The likes of MeCure Industries Plc, VFD Group, Nigeria Infrastructure Debt Fund (NIDF), and Africa Plus Partners added to the stock market’s positive trajectory in the period under review.
Sectoral performance on the Exchange was positive and leading the chart was the NGX Oil/Gas sector.
The CEO of Wyoming Capital and Partners, Tajudeen Olayinka in a chat with InsideBusinessNG on the stock market performance in 2023, said federal government policies and market expectations triggered the bullish market performance.
According to him, “The tempo around bullish sentiments will remain in the remaining part of the year and beyond, as more companies get listed on the Exchange and as additional shares are listed by existing companies who may wish to raise money at a lower cost of capital.”
He added that the high yield environment in the fixed income space, in line with CBN’s resolve to attract foreign portfolio investments with high interest rates, may cause some temporary moderation in aggressive price movement in December 2023 trading activities.
The vice president of Highcap Securities, David Adonri, said the gain reported by the stock market in 11 months of 2023 is on the backdrop of impressive corporate earnings of listed companies.
He stated that foreign investors, most especially, utilised the cheap price of some fundamental stocks listed on the NGX.
He added that the overall market performance is driven majorly by sentiment arising from the smooth handover and Tinubu’s bold economic policy on foreign exchange.
According to him, “Tinubu’s prompt change of security chiefs also boosted investors’ confidence. The removal of Godwin Emefiele as (CBN) Governor was another icing on the cake which impressed investors. All these added to the usual end-of-quarter rally to propel the stock market.
“Since the huge gain was propelled by investor sentiment, interest in stock in H2, 2023 can only be sustained if the policy changes translate into growth in corporate fundamentals and a fall in interest rates, otherwise, we might see a market correction.”
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