The equities market continued from its positive rally as the overall market capitalisation of the Nigerian Exchange Limited (NGX) appreciated by N2.68 trillion in the first trading week of 2024.
As key fundamental equities continued to rally, the overall equities market capitalisation closed on Friday at N43.593 trillion, gaining N2.68 trillion or 6.54 percent from N40.917 trillion it opened for trading this year.
Consequently, the NGX All-Share Index increased to a historic 79,664.66 basis points, representing a growth of 4,890.89 basis points or 6.54 percent from 74,773.77 basis points when the stock market closed for trading in 2023.
In the first week of 2023, the equities market segment of the NGX kicked off the first trading week with a gain of N1.08 trillion in market capitalisation as investors positioned themselves in dividend-paying equities.
The breakdown revealed that on the first trading day in 2024 (Tuesday), investors bargain hunting in Airtel Africa Plc and 49 others underpinned an N667 billion increase in the overall capitalisation. As a result, the NGX All-Share Index gained 1,217.11 basis points or 1.63 percent to close at 75,990.88 basis points.
InsideBusiness Online reported on Wednesday that the equities market sustained the uptrend performance with a gain of N847 billion, as bargain hunting in Presco Plc and 71 underpinned market performance.
Consequently, the NGX All Share Index gained by 1,546.69 basis points or 2.04 percent to close at 77,537.57 basis points. Also, market capitalisation gained N847 billion to close at N42.430 trillion.
Closing on Thursday, the equities market gained N264.3billion to close at N42.694trillion in market capitalisation, while the NGX All Share crossed 78,000 basis points to 78,020.54 basis points, gaining 482.97basis points or 0.62per cent from 77,537.57 basis points.
On Friday, the equities market appreciated by N899.69billion to close at N43.594 trillion from N42.694 trillion it opened for trading, while the NGX All-Share Index stood at 79,664.66basis points from 78,020.54 basis points it opened for trading.
The equities market has been on an upward trajectory since the entry of the new administration led by President Bola Tinubu, due to proactiveness in implementing necessary reforms such as the removal of fuel subsidies and the liberalization of the foreign exchange market.
Data from NGX shows that foreign investors are closing the gap on domestic investors.
A report by the NGX disclosed that domestic investors’ dominance in the stock market reduced to 76.26 percent in November 2023 from 84.90 percent reported in October.
The Exchange in its “domestic & foreign portfolio participation in equity trading” report disclosed that foreign investors contributed about 23.74 percent in November 2023, from 15.10 percent in October 2023.
Capital market analysts have attributed the growth in foreign investors’ increasing participation in the equities market to a foreign exchange unification move by the federal government as they take positions in cheap fundamental stocks.
In November 2023, total transactions by both foreign and domestic stood at N300.67billon with foreign investors transacting N71.37 billion and domestic investors N229.30 billion.
While investor sentiment suggests that the Nigerian equities market’s recent peak is not a mere flash in the pan, experts stress the importance of ongoing stability, security, and continued economic reforms. The historic high of the Nigerian equities market has created ripples in the global financial arena, with investors keenly observing the nation’s economic trajectory.
Although it does not guarantee prosperity, it does signify global recognition of Nigeria’s vast potential. The hope is that this extraordinary accomplishment will lead to improved living standards for Nigerians and bolster economic stability for the nation.
The Managing Director, ARM Securities Limited, Rotimi Olubi explained, “This optimistic trajectory appears to be an extension of the momentum gained in the previous year, instilling fresh confidence among local investors in the equities market following its impressive 2023 performance (45.90per cent YtD).
“This confidence persists despite challenges both domestically and globally. Moreover, it seems investors are strategically positioning themselves in high-dividend-yielding stocks in anticipation of the imminent release of the 2023FY earnings results.
“In light of these developments, our recommendation is for investors to focus their attention on stocks exhibiting robust fundamentals, particularly within the Banking and Oil and Gas sectors. This strategic approach aligns with the current market dynamics and positions investors favourably in anticipation of future trends.”
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