By Chukwuma Umeorah
The Nigerian Stock Market recorded significant gains throughout the month of October as the benchmark All Share Index (ASI) and Market Capitalisation defied prevailing economic challenges to surge from 66,382.14 basis points and N36.33 trillion at the end of September to 69,236.19 basis points and N38.03 trillion, respectively, on the last trading day of October. This performance represents a substantial gain of N1.71 trillion in just one month.
The uptick in market performance comes against the backdrop of rising inflation, currently at a staggering 26.7 per cent, the free-fall in the nation’s currency and a generally weak macroeconomic environment.
In the month under review, the Naira reached an unprecedented low of N993/$1 on NAFEM (Nigerian Autonomous Foreign Exchange Market), while unofficial P2P trading reflected a rate of about N1,300 to a dollar. though policy reforms are underway to crackdown on illegal currency trading.
The CEO of Crane Securities, Mike Eze, however highlighted that the volatility experienced in the FX market and the impact of the Naira’s free-fall in October, prompted a shift of investor focus from the money market to the capital market.
This, he opined, contributed to the surge in equities market capitalisation as investors sought a secure haven for their investments.
“The FX is often times an index that indicates how well an economy is doing. This is because the Nigerian economy is import dependent, we are not a productive economy per se.”
Even the little production we do, most of the materials used are imported. The FX therefore determines what happens in our economy, and in the month of October, there was a freefall of the Naira. This made a lot of investors move from the money market to the capital market.
The Vice Chairman, Highcap Securities, David Adonri echoed similar sentiments, noting that despite the daunting inflationary pressures on the nation’s economy, investors’ confidence was bolstered by impressive Q3 2023 results in banking stocks and the distribution of dividends. He projected a relatively stable capital market landscape as investors position themselves for the approaching year-end. “some large to mid-cap companies have released impressive third-quarter (Q3 2023) earning reports, adding to investors’ growing confidence in the Nigerian stock market. This trend is likely to persist, as investors position themselves for an anticipated year-end rally in stock prices.”
Daily Sun analysis revealed that benchmark indices for the stock market showed that the ASI which opened the month at 66,382.14 points indicates a Year-to-date growth of 35.09 per cent. The financial services sector, with a particular emphasis on banking stocks, played a pivotal role. Notably, the volume of trading in banking stocks witnessed substantial growth, contributing significantly to the overall market’s buoyancy.
Meanwhile, at the end of yesterday’s (Tuesday) trading session on the local bourse, a total of 483.27 shares corresponding to a market value of N6,04 billion were traded in 8,027 deals. Compared with the previous NGX trading day, the data shows 12 per cent improvement in volume, a 27 per cent decline in turnover, but a 5 per cent improvement in deals.
NGX ASI increased by 1,124.48 points to close at 69,236.19, representing a weekly gain of 3 per cent, a monthly gain of 3.69 per cent, and an overall year-to-date gain of 35.09 per cent.
Airtel Africa was the best performing stock as its value rose by 10 per cent to close at N1540 per share. They were followed by Cadbury and NNFM which rose by 9.92 per cent each to close at N13.85 and N19.95 per share respectively.
Market breadth was largely positive with 40 stocks gaining in value while 25 declined.