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By Chinwendu Obienyi
The 2022 financial year will never be forgotten in a hurry as it brought about several new developments to Nigeria’s capital market amid multiple Monetary Policy Rate (MPR) adjustments, high inflationary pressure, foreign exchange (FX) scarcity and political tension.
Nigeria’s stock market had in 2021 recorded its best performance (50 per cent) raising renewed optimism for investors that 2022 would be better.
Daily Sun analysis of market’s activities for the year under review revealed that the NGX’s All Share Index (ASI) – which tracks general market movement of all listed equities, opened the year at 42,716.14 points and closed at 51,251.06 points, representing 19.98 per cent raise as against 6.07 per cent recorded in 2021.
Furthermore, its market capitalisation- total value of all listed equities on the NGX, grew by N5.619 trillion from N22.296 trillion to N27.915 trillion, representing a gain of N5.619 trillion.
Consequently, Year to date, the performance of all sector indices closed largely positive.
For instance, NGX Oil and Gas emerged best performer sector after gaining 34.60 per cent, followed by NGX Industrial Goods (+19.67 per cent), NGX Pension (+5.38 per cent), NGX Banking (+5.84 per cent) and NGX 30 (+5.38 per cent) while NGX Consumer goods (-0.15 per cent) and NGX Insurance (-12.34 per cent) were the laggards.
Over the course of the year, some of the top equities that fared well include PZ (+86.07 per cent y/y), Guinness (+77.69 per cent y/y), Airtel Africa (+71.20 per cent y/y), Fidelity Bank (+70.59 per cent y/y) and Seplat (+69.23 per cent y/y), while some of the laggards include Honeywell Flour (-31.18 per cent y/y), Nestle (-29.33 per cent y/y), Unilever (-20.00 per cent y/y), Nigerian Breweries (-18.00 per cent y/y) and GTCO (-11.54 per cent y/y).
But the aforementioned performances came as a result of some initiatives such as the listing of BUA Foods, Geregu Power, the induction of 133 new authorised dealing clerks, the launch of the revised capital market plan and SEC’s approval of NGX technology board listing rules, among others. In addition, the accommodative interest rate environment provided room for buying interest amid low yields on fixed-income instruments. These developments contributed to boosting the activities of the market.
Listings
Starting the year, BUA Foods listed a total of 18 billion ordinary shares at N40.00 per share under the Consumer Goods sector of NGX, with the trading symbol, BUAFOODS. The listing of the shares added N720,000,000,000 to the market capitalization of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.
Commenting on the listing, Abdul Samad Rabiu, Chairman of BUA Group said: “I am delighted that yet another member of BUA Group has been listed on the NGX. This shows our commitment to national economic growth and support for the food security drive of the nation in alignment with global sustainability goals.
We appreciate the continued support of our stakeholder’s financial advisers, stock brokers, suppliers, customers, consumers and members of staff. In particular, we cherish our host communities with whom we continue to entrench very strong and mutually beneficial relationships.”
Also, Dangote Cement Plc successfully executed the second tranche of its Share buy-back program on the 19th and 20th of January 2022. The Tranche II of the program entailed repurchasing 126,748,153 units of shares, representing 0.7 per cent of the company’s fully paid ordinary shares at an average price of N276.89.
Furthermore, the CBN’s approval of Payment Service Bank licenses for the two listed telecommunication players — MTN Nigeria and Airtel Africa spurred a positive market reaction.
A total of 2.5 billion ordinary shares of Geregu Power Plc during the year were listed at N100 per share, under the Utility sector and Electric Power Generation sub-sector of NGX, with the trading symbol, GEREGU.
Geregu Power, a leading power generation company (GenCo) in Nigeria, was the first GenCo to be listed on the NGX Main Board, a listing segment for well-established companies with demonstrable records of accomplishments.
The listing of Geregu’s shares added N250 billion to the market capitalization of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.
Reacting to the development, the Chairman of Geregu Power, Femi Otedola, stated that the listing of the company was the actualisation of a vision to bring world-class standards in governance, sustainability, and business processes to the Company and the Nigerian electricity sector, adding that listing on the Main Board of NGX would ensure that the long-term growth of the company is assured and its benefits would be passed on to their shareholders.
New Dealing Clerks
The NGX in February 2022 inducted a total of 133 authorised dealing clerks from 63 trading License Holders charging them to uphold the highest level of ethics and responsibility.
Speaking at the ceremony, the Chief Executive Officer of NGX, Mr Temi Popoola, said the NGX was pleased to celebrate the successful Dealing Clerks.
He noted that the induction was evidence of years of dedication, adaptability, and hard work, and symbolizes your commitment to uphold the highest ethical standards and to always put the interest of the market first. Popoola also advised the new clerks to embrace the culture of continuous learning in the fast-paced environment and the ethical standards of brokers.
Revised Capital Market Master Plan
As part of ways to accelerate the growth of the nation’s capital market and increase both domestic and foreign investor participation, the Securities and Exchange Commission (SEC) in November 2022 launched a revised capital market master plan.
Its Director General, Lamido Yuguda stated that the Master Plan is designed to chart a strategic direction while providing clarity of vision and a robust road map required to facilitate innovation, investment, growth, and expansion of empowering opportunities in Nigeria and beyond. He said:
Yuguda said, “Our vision is “To be Africa’s most modern, efficient, and internationally competitive market that catalyzes Nigeria’s economic growth and development. We believe the plan provides a solid roadmap for achieving this vision as we collaborate with other stakeholders to effectively drive its implementation”.
Rules for Listing on NGX Technology Board
The Securities and Exchange Commission (SEC) in December approved the Rules for Listing on NGX Technology Board.
The NGX Technology Board is a specialised platform for technology-based companies to list and raise capital on the Exchange. Through the Board, NGX aims to encourage investments in indigenous technologically inclined companies and others across Africa, provide greater visibility to these companies and ultimately deepen the Nigerian capital market.
Commenting on the approval of the Rules, the Chief Executive Officer of NGX, Temi Popoola said the approval was a landmark achievement that will position the Exchange as an attractive destination for capital formation by companies within the Technology Sector.
“We are confident that the NGX Technology Board will encourage start-ups, both Nigerian-founded and from other African countries, to list on the exchange as they work towards meeting their financing needs,” he said.
Stakeholders’ react
Reacting to the performance of Nigeria’s stock market, market operators said the positive performance is an indication of modest recovery, having once surpassed this very closing figure in the course of the year.
The Chief Executive Officer, NGX Limited, Temi Popoola, said despite the global macroeconomic challenges and volatility, described the NGX’s performance as a fantastic year.
He said, “We have also seen several landmark listings in equity and fixed income, including BUA Foods and Geregu Power, which have played a key role in driving growth in the market this year.”
Also speaking, the Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka, described the performance of the market as “exceptional” while stating that the market responded to shocks and recovered from shocks in 2022.
“Even though market performance in 2022 was that of mixed bag, I think we can ascribe the final closing figure to the usual market fatigue that normally accompanies prolonged repricing of securities across markets and instruments and we can also see that the real yields in the fixed income space have all closed negative in 2022. So, any time market prices itself out of context or out of acceptable range, especially when prices have become too low to resist, price recovery sets in, and that is what we have been witnessing since the last MPC meeting in November that produced an interest rate hike of 16.5 per cent.
Another important factor is the usual bargain hunting that normally precedes financial year-end rally, since many of the listed companies have their financial year-end as 31st December. So, bargain hunters are beginning to take positions ahead of investors that will normally like to benefit from year-end dividend payments.
Clearly, it takes two to tango. In summary, the market responded to shocks and recovered from shocks in 2022. This does not however, mean that market cannot suffer a setback in 2023, given numerous headwinds that are expected to naturally accompany a transition from a government that has consistently pursued public sector domineering focus in approximately last 8 years, to a new government that is likely to shift its focus to private sector dominance”, Olayinka said.
