Nigeria’s Stock Market Surges by 38% in Nine Months, Adding N15.66tn Despite Economic Challenges

Amidst turbulent economic challenges, Nigeria’s stock market has demonstrated remarkable resilience, posting impressive gains that underscored investor confidence and market vitality.

Precisely, with just one trading day left to the end of the first nine months of 2024, the Nigerian stock market has gained N15.66 trillion as investors continued to invest in blue-chip companies.

The double-digit inflation rate, unstable foreign exchange market, soaring Monetary Policy Rate (MPR), among other macroeconomic challenges could not deter investors as they continued to take advantage of the opportunities the stock market offers.

The Nigerian economy has witnessed inflation that moved from 28.92 per cent as at December 2023 to 32.15 per cent as of August, while the naira exchange rate against the dollar closed on Friday at N1,637.69/$.

Also, the Central Bank of Nigeria (CBN) has increased the MPR by 850 basis points to 27.25 per cent from 18.75 per cent last year with a focus on moderating inflation.

Despite these challenges, the overall market capitalisation of the Nigerian Exchange Limited (NGX) as of September 27, 2024, closed at N56.578 trillion, which was an increase of N15.66 trillion or 38.27 per cent when compared to the N40.918 trillion it closed for trading at the end of 2023.

In addition, the NGX All-Share Index (NGX ASI), an indicator that tracks the general market movement of all listed equities on Exchange, including those listed on the Growth Board, regardless of capitalisation closed on Friday, at 98,458.68 basis points, about 31.7per cent average investors return from 74,773.77 basis points the stock market closed for trading 2023.

The reported 31.7 per cent Year-till-Date (YtD) gain in NGX ASI meant the Nigerian stock market was one of the best Exchanges in Africa, ahead of Johannesburg Stock Exchange, and Egypt Stock Market.

Analysts also argued that some reforms by the federal government and the CBN played a critical role in the stock market performance in nine months. Specifically, they noted that reforms in the foreign exchange market, and hikes in MPR impacted trading in the fundamentals of companies listed on the Exchange and contributed to foreign investors’ uptick in the market.

Foreign investors’ participation in the stock market stood at 18.86 per cent as of August 2024 when compared to 9.22 per cent, reducing domestic investors’ dominance to 81.14 per cent as of August 2024 from 90.78 per cent as of August 2023.

The aggressive foreign investors’ participation impacted on highly capitalised stocks such as Dangote Cement Plc, and Airtel Africa Plc, among others that triggered the N15.66 trillion market capitalisation in nine months of 2024.

As at September 27, 2024, the share price of Dangote Cement closed at N532 per share, an increase of 66.3per cent from N319.9 it closed in 2023, while Airtel Africa closed at N2,200 per share as of September 27, 2024, about 17per cent hike from N1,887.00 per share it closed 2023.

The gain in Dangote Cement, among others stocks, impacted on the NGX Industry Index that closed September 2024 at 3,847.83 basis points, a growth of 42per cent from 2,712.27 basis points it opened for trading 2024.

Also, the ongoing banking sector recapitalisation as directed by the CBN, coupled with impressive 2024 half year corporate earnings also influenced investors’ decisions in taking positions in banking stocks.

 For instance, Guaranty Trust Holding Company Plc recently completed a N400.5 billion public offer which saw its stock price at N47.4 per share as of September 27, 2024, about 17per cent increase from N40.50 it opened for trading.

The contribution of this stock impacted on NGX Banking Index which increased to 933.79basis points as of September 27, 2024, 4.1per cent YtD growth from 897.2basis points it closed 2023.

THISDAY further gathered that reforms in the Oil and Gas sector was also driving the NGX Oil & Gas Index performance. With the gain in Seplat Energy Plc to N4,103.10 per share as at September 27, 2024 from N 2,310.00 per share it opened this year, the NGX Oil & gas Index closed September 27, 2024 at 1,990.84 basis points, representing an increase of 91per cent from 1,043.06basis points

Commenting on the stock market performance in the first nine months of 2024, the Vice President, Highcap Securities Limited, Mr. David Adnori, argued that investors were trading based on sentiment.

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

Adnori, however, was optimistic that the stock may maintain its positive momentum on the backdrop of banking sector recapitalisation and expected positive first half 2024 corporate earnings to be released by banks to further strengthen the performance of the bourse.

Amid the hike in MPR to 27.25 per cent, capital market experts stated that its impact has created sentiment trading among investors who see the fixed-income market as an alternative investment opportunity to hedge against double-digit inflation.

Investment Banker & Stockbroker, Mr. Tajudeen Olayinka, stated that the N15.66 trillion market capitalisation gain in nine months of 2024 tells us the presence of huge liquid funds in the hands of institutional investors who currently dominate activities in the stock market.

“It also holds the fact that the future is bright for some of the listed companies, hence, investors are positioning their portfolios for that brighter future. This is also the reason the market remains resilient in spite of the high interest rate regime,” he said.

On the stock market projection for the rest of the year, he said, “It is going to be more of a balanced market, with investors exercising their rights to additional shares and/or taking new shares to maintain a balance.”

Kayode Tokede

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