Nigerian Stock Market Emerges Among Africa’s Top Four Despite Double-Digit Inflation

Despite challenges in the foreign exchange market and a regime of double-digit inflation rate, the Nigerian stock market investors’ returns currently stand at 31.34 per cent in its Year-till-Date (YtD) growth, emerging as one of the top four best-performing Exchanges in Africa, investigation has revealed.

Investigations further revealed that the Ghana Stock Exchange Composite Index (GSE-CI), and the Malawi Stock Exchange (MSE) in their YtD performance emerged as the first and second best-performing exchanges respectively, in Africa.

In YtD performance, GSE-CI stood at 51.38 per cent on investors’ returns, while the MSE All Share Index appreciated to 48.86 per cent as of the December 6, 2024 close of the market.

GSE-CI emerged as Africa’s top-performing market due to the resilience of key sectors, macroeconomic stabilisation, hike in prices of Gold and increasing trading volume and liquidity.

Improvements in Ghana’s economic stability, including a recovery from the domestic debt exchange programme and a steady cedi, encouraged more participation in the market.

Additionally, Ghana’s high treasury bill yields may have attracted investors who eventually diversified into the stock market.

Other top gainers in YtD return include the Lusaka Securities Exchange All Share Index (LuSE) at 46.16 per cent and the Nigerian Exchange Limited All-Share Index (NGX ASI) at 31.34 per cent growth in YtD performance.

Further findings revealed that the Zimbabwe Stock Exchange All Share Index (ZSE ASI) is the only worst Exchange in Africa, as its performance in YtD is at -99.89 per cent.

ZSE ASI is currently faced with hyperinflation and currency challenges, weak foreign participation, corruption and governance issues, among other factors.

Explaining the performance of the Nigerian stock market, analysts have cited foreign investors inflow, the banking sector recapitalisation policy of the CBN, and impressive corporate earnings by banks, among others, as the major drivers.

Following reforms in the foreign exchange market, foreign investors’ transactions on the NGX reached a total of N744.34 billion in 10 months of 2024, an increase of 156per cent Year-on-Year (YoY) when compared to N291.38 billion in 10 months of 2023.

The CBN recently implemented significant reforms in the foreign exchange market aimed at enhancing transparency, compliance, and market stability.

These reforms were part of the CBN’s broader strategy to create a fairer, more stable FX market and support economic growth through better monetary policies.

In tandem with these reforms, the CBN has also implemented aggressive Monetary Policy Rate (MPR) hikes, intending to curb inflation and stabilise the naira, a move supported by the International Monetary Fund (IMF).

The inflation rate, according to the National Bureau of Statistics (NBS) stood at 33.88 per cent as of October 2024 from 28.2per cent November 2023, while MPR has been increased by CBN to 27.50per cent as of December 2024 from 18.75 per cent in November 2023.

“The considerations of the meeting were held in the backdrop of renewed inflationary pressures as the headline food and core measures rose year on year in October 2024. Members therefore agreed unanimously to remain focused on addressing price developments,” the CBN governor, Mr. Olayemi Cardoso had said.

With the foreign investors’ increasing participation in the stock market, the capital raising exercise policy of CBN, among other reforms, the stock prices of AirtelAfrica Plc, Dangote Cement Plc, Seplat Energy Plc, Guaranty Trust Holding Company Plc, among others, appreciated significantly.

The listing of Transcorp Power Plc, and Aradel Holdings currently valued at N2.7 trillion and N2.25 trillion by market capitalisation also contributed to the stock market’s N59.107 trillion growth in the period under review.

With the 31.34 per cent YtD growth as of December 6, 2024, in the stock market, analysts have projected that the bourse is not expected to surpass its performance in 2023.

Kayode Tokede

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