Follow Us on Google
By Chinwendu Obienyi and Chukwuma Umeorah
Despite concerns around soaring inflation, interest rate hikes and weak macroeconomic indices, investors’ confidence in Nigeria’s stock market remained strong, leading to Nigerian Exchange Limited (NGX) emerging one of the best performing exchanges in Africa during a 3-month interval. According to African markets, a website tracking the performance of exchanges in Africa, Ghana Stock Exchange (+22.84 per cent) emerged first while NGX (+19.33 per cent) emerged second on the list, followed by Malawi stock exchange (+15.79 per cent).
This development has pushed the market to its 15-year high on the back of strong positive sentiments, as the market capitalisation- listed value of equities, which opened the trading month of August at N35.011 trillion, closed the month at N36.422 trillion, hence gaining N1.41 trillion. On the other hand, the All-Share Index (ASI), which is the broad index that measures the performance of Nigerian stocks, opened the trading month at 64,337.52 index points at the beginning of trading on August 3, 2023, and closed at 66,548.99 points at the end the month on August 31, gaining 2,211.47 basis points or 3.44 per cent.
The bullish trend can be attributed to investors’ jostling for low, medium, and high capitalised stocks across some major sectors amid favourable policies introduced by President Bola Tinubu’s new administration such as the removal of fuel subsidies, unification of exchange rate, investors strategically positioning themselves and taking advantage of the recent record earnings posted by quoted firms and the recent formation of the country’s economic cabinet and executives. Interestingly, the market traded in mixed sentiments during the month under review.
Reacting to the performance of the market, market analysts maintained that most investors, particularly domestic investors, are optimistic that the economy will take shape soon, hence the reason the stock market is defying current macroeconomic uncertainties.
Cordros Research in their Market review and outlook for financial markets titled; Veering from the Watershed Point, stated that the equities market resilience reflects heightened investor optimism for domestic growth with the new administration’s promulgation of long-needed policies.
According to the report, the implementation of policy reforms, accommodative monetary policy and resilient corporate earnings have so far supported buying activities in August. The report further said that “Even though foreign investors are expected to stay on the sidelines as long as FX illiquidity issues persist, its baseline expectation is that the market will deliver a positive return of 25.8 per cent in the full year of 2023”.
Meanwhile, a total turnover of 2.866 billion shares worth N37.050 billion in 33,968 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.812 billion shares valued at N29.299 billion that exchanged hands in the previous week in 31,163 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.424 billion shares valued at N13.398 billion traded in 18,216 deals; thus contributing 49.70 per cent and 36.16 per cent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 652.296 million shares worth N4.434 billion in 4,931 deals while the Consumer Goods Industry recorded a turnover of 264.359 million shares worth N12.036 billion in 10,821 deals.
Trading in the top three equities namely Transnational Corporation Plc, Sterling Financial Holdings Company Plc and Fidelity Bank Plc (measured by volume) accounted for 1.065 billion shares worth N6.525 billion in 6,801 deals, contributing 37.17 per cent and 17.61 per cent to the total equity turnover volume and value respectively.
