The Nigerian stock market gained a total of N18.2 trillion in the first 11 months of 2024, amid rising inflationary pressure and increasing Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), among other macroeconomic challenges.
Since the beginning of 2024, the stock market has witnessed an unprecedented rally and buying- interest, especially in the financial services, consumer, and industrial goods sub-sector, which have continued to trigger massive bargain hunting in large companies.
Specifically, the overall market capitalisation that opened 2024 at N40.918 trillion, gained N18.2 trillion or 44.5 percent to close on November 29, 2024, which was the last trading day of this month, at N59.107 trillion.
Consequently, the Nigerian Exchange Limited All-Share Index (NGX ASI) closed on November 29, 2024, at 97, 506.87 basis points, about 22,733.10 basis points or 30.4 percent from 74,773.77 basis points the stock market opened for trading this year.
THISDAY findings showed that new listings, investors’ interest in some blue-chip companies contributed to the stock market’s 30.4 percent Year-till-Date (YtD) growth as the local economy is faced with double-digit inflation, increasing MPR and exchange rate volatility.
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 27.50 per cent as of November 2024 from 18.75 per cent November 2023.
“The considerations of the meeting were held on 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.
This was the sixth time the CBN has raised the interest rate since February 2024. In September, the bank pushed the rate to 27.25 per cent following a drop in the country’s inflation level in August 2024.
Among other key macroeconomic challenges was the weakening of the Naira to N1, 663.396 against the dollar as of November 2024 from N942.117 against the dollar in November 2023.
Amidst these challenges, foreign investors have increased their participation in the stock market, trading about N744.34 billion out of the N4.47 trillion in 10 months of 2024 as against N291.38 billion out of N2.9 trillion transactions in 10 months of 2023.
With foreign investors increasing participation in the stock market, the likes of Airtel Africa Plc., Dangote Cement Plc., Seplat Energy Plc., Guaranty Trust Holding Company Plc., among others have appreciated in stock prices significantly.
THISDAY checks showed that the stock price of Dangote Cement gained 49.7 per cent YtD to close on November 29, 2024 at N478.80 per share, while Airtel Africa appreciated by 14 percent YtD growth to close at N2, 156.90 per share. Seplat Energy also gained 129 percent to close November 29, 2024 at N5, 300 per share.
Also, the stock price of Zenith Bank Plc grew by 15 percent YtD to close at N44.50 per share while GTCO’s stock price gained 30.7 percent YtD to close at N52.95 per share as of November 29, 2024.
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 N59.107 trillion growth in the period under review.
With the 30.4 percent in 11 months gain in the stock market, analysts have projected that the bourse is not expected to surpass its performance in 2023.
The stock market in 2023 gained 45.90 percent.
Commenting on the performance of the market in the first 11 months of 2024, the chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion said, “trading on the Exchange this year is buoyed by renewed buying interest after a series of reforms that has attracted foreign investors amid mixed corporate scorecards by listed firms.”
He stated that many companies across various sectors posted impressive numbers, while some recorded mixed performance and others were disappointing.
On market outlook, Omordion said “we expect buying sentiments to continue as investors and bargain hunters react to December spending and the current hike in MPR by CBN.” He, however said, “pullbacks are creating ‘buy’ opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment direction eventually.”
On his part, Investment Banker & Stockbroker, Mr. Tajudeen Olayinka, attributed the stock market gain in 11 months of 2024 to impressive corporate earnings and policies of Tinubu led-administration, stressing that foreign investor, especially, utilised the cheap price of some fundamental stocks on the bourse.
He added that the overall market performance was driven majorly by sentiment arising from the smooth handover and President Bola Tinubu’s bold economic policy on foreign exchange.
He noted that the stock market may witness re-pricing mode in December 2024 because of interest rate hike by CBN and continued issuances of one-year Treasury bills at high effective yield of over 20 per cent.
“So, we may be witnessing a shift by investors to the fixed income market in December 2024,” he added.
Kayode Tokede
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