Equities Market Gain N18.2trn Amid Inflation, Insecurity In Q1 2024
The equities market may have benefitted from the bold reforms of the current administration following the N18.2 trillion increase in its capitalisation in the first quarter of 2024.
As of the close of trading on 28th March 2024, market capitalisation stood at N59.12 trillion, a 44.49 percent or N18.2 trillion increase over N40.918 trillion when it opened for trading in January.
The monthly breakdown revealed that the equities market in January 2024 gained N14.44 trillion in market capitalisation, while in February, the market cap of the equities market dropped by N650.5 billion in February 2024 amid corporate earnings by listed companies, as investors divested into the Treasury Bills (T-bills) market.
In March, however, the market capitalisation added N4.41 trillion amid mixed corporate earnings by listed companies.
The gain in market capitalisation came on the backdrop of rising insecurity, double-digit inflation, other macroeconomic challenges, and global uncertainty.
Since the beginning of the year, the stock 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 the world.
Similarly, the NGX’s all-share index (ASI), an indicator used to measure the performance of listed firms on NGX, opened the year at 74,773.77 bases, implying an increase of 39.84 per cent to close March 28, 2024, at 104,562.06 basis points.
Responding to market performance in Q1 2024, the Vice President of Highcap Securities Limited, 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 had hope in his ability to rebuild the economy and implement economy-friendly policies.
Amid the hike in the Monetary Policy Rate to 24.75 per cent, capital market experts stated that its impact has created sentiment trading among investors who see fixed-income markets as alternative investment opportunities to hedge against double-digit inflation.
At the second MPC meeting in 2024, the CBN Governor, Olayemi Cardoso stated that the committee’s decisions were centred on 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 enduring output expansion is possible only in an environment of low and stable inflation,” he said.
The CEO of Wyoming Capital and Partners, Tajudeen Olayinka, said the equities market is now in a repricing mode because of interest rate hikes and continued issuances of one-year Treasury bills at a high effective yield of over 20 percent.
“So, we may be witnessing a shift to the fixed income market in the second quarter of 2024,” he added.
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