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By Chinwendu Obienyi and Chukwuma Umeorah
Investors trading on the floor of the Nigerian Exchange Limited (NGX) showed enthusiasm ahead of earnings season, gaining N14.44 trillion in January 2024 amid galloping inflation, low supply of fireign exchange and naira devaluation.
The domestic bourse closed 2023 on an upbeat note, recording a stellar 45.9 per cent gain and this impressive performance was the best since the 50 per cent surge it recorded in 2020. The performance also placed 2023 as the 9th most successful year in the exchange’s history.
Due to this development, outlooks from market operators were boldly forecasted to be positive and any fears that Nigeria’s equities market might run out of bullish steam owing to the macroeconomic challenges rocking the country’s economy was laid aside as the market has been breaking records ever since the year started.
Specifically, the All-Share Index (ASI) which opened the year at 74,773.77 points, closed at 101,154.46 points while market capitalisation which opened at N40.92 trillion, increased by N14.4 trillion to close at N55.357 trillion during the month under the review. As such, year-to-date (YTD) return printed at 35.3 per cent.
Similarly, trading activity for the month under review surged as average volume and value traded rose 98.2 per cent and 67.1 per cent month-on-month (m/m) to 875.9 million units and N14.8 billion, respectively.
Further analysis of the market showed that performance was positive as all indices gained, except the Banking index. The Industrial Goods index posted the biggest gain of 107.9 per cent on the back of strong buying interest in Dangote Cement (+138.5 per cent) and BUA Cement (+90.7 per cent). Following suit, the Consumer Goods and Insurance indices rose 24.3% and 21.7 per cent m/m respectively, driven by price appreciation in BUA Foods (+40.5 per cent), PZ (+24.0 per cent), Linkage Assurance (+46.3 per cent), and AIICO (+35.0 per cent).
Similarly, the Oil & Gas and AFR-ICT indices appreciated by 20.0 per cent and 6.2 per cent m/m due to gains in Eterna Oil (+58.5 per cent), Seplat (+33.1 per cent), and MTNN (+6.4 per cent). However, the banking index declined by 3.4 per cent following losses in GTCO (-8.6 per cent) and FBNH (-7.9 per cent).
Despite a run of bearish performances in the domestic bourse earlier in the week, the domestic stock market rebounded by the end of the week, rising to 1.97 per cent to close at 104,421.23 points. This has led to expectations that the market is likely to undergo a mild correction in the new trading month. Market operators further added that while there will be an influx of 2023 full year numbers alongside dividend declarations, there is a potential avenue for profit-taking especially on stocks that have seen notable price increases recently.
In its weekly assessment of the domestic bourse, analysts at Afrinvest, said, “In February, we expect a mild market correction on the local bourse, owing to a mix of profit taking activities and earnings season frenzy”, they said.
For his part, the Chief Executive Officer, Mike Eze, said, ““The market is going up now, people are bound to take profit, because most of the investors are short-term investors and once they have realized the percentage appreciation that they were looking forward to, they will exit and come back probably when the shares have shed weight, in terms of pricing.”
