Nigeria’s Equities Market Appreciates By N13.8trn In Two Months

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The local equities market of the Nigerian Exchange Limited (NGX) appreciated by N13.8 trillion in market capitalisation in the first two months of 2024.

The market capitalisation of listed equities, which opened the year at N40.917 trillion, closed on Thursday, February 29 at N54.707 trillion representing N13.8 trillion or 33.7 per cent appreciation.

Similarly, the NGX’s All-share index (ASI), an indicator used to measure the performance of listed firms on NGX to close at 99,980.30basis points on Thursday, February 29, an increase of 25,206.53 basis points or 33.71 per cent from 74,773.77basis points it opened for trading this year.

The equities market performance in the first two months of 2024 is on the backdrop of rising insecurity, inflation, unstable foreign exchange, among other domestic macroeconomic challenges and global uncertainty.

Since the beginning of the year, the equities market has witnessed an unprecedented rally and buying interest, especially in the financial services, consumer and industrial goods sub-sector, which has continued to trigger massive bargain hunting in large company shares.

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 the best-performing in Africa ahead of Johannesburg Stock Exchange (JSE), Egyptian Exchange (EGX 30) Index and The Ghana Stock Exchange.

Responding to market performance in January, the vice president, Highcap Securities Limited, Mr. David Adnori stated that investors are trading based on sentiment.

He stated that the emergence of President Bola Tinubu further energised the stock market since market participants have hope in his ability to rejig the economy and implement economy-friendly policies.

Amid hike in Monetary Policy Rate to 22.75 per cent, capital market experts stated that its impact has created sentiment trading among investors who see fixed-income market as alternative investment opportunity to hedge against double-digit inflation.

On the 22.75 per cent MPR by the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC), the stock market depreciated by N650.5 billion in February 2024.

At the first MPC meeting in 2024, the CBN Governor, Olayemi Cardoso stated that the committee’s decisions were centered on the current inflationary and exchange rate pressures, projected inflation, and rising inflation expectations.

“Members were concerned about the persistent rise in the level of inflation and emphasized the Committee’s commitment to reverse the trend as the balance of risk leaned towards rising inflation.

“The Committee, however, acknowledged the trade-off between the pursuit of output growth and taming inflation but was convinced that an enduring output expansion is possible only in an environment of low and stable inflation,” he said.

The CEO, Wyoming Capital and Partners, Tajudeen Olayinka, said the stock market is now in a repricing mode because of interest rate hike and continued issuances of one-year Treasury bills at high effective yield of over 20per cent. So, we are witnessing a shift to fixed income market.

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