Equities Market Gains N15.7trn in Nine Months

The Nigeria’s equities market gained N15.7 trillion in nine months of 2024 owing to growing investors’ appetite for blue-chip companies.

The gain came despite the double-digit inflation rate, unstable foreign exchange market, and soaring Monetary Policy Rate (MPR), among other macroeconomic challenges.

The domestic economy has witnessed inflation that moved from 28.92 per cent in December 2023 to 32.15 per cent as of August, while the Naira against the dollar closed on September 30, 2024, at N1601.03 against the dollar, rising from N899.39 against the dollar it opened for trading at the official market.

In addition to the Naira’s woe, the Central Bank of Nigeria (CBN) increased its MPR by 850 basis points to 27.25 per cent from 18.75 per cent last year, citing inflation tackling as the reason.

Amid these challenges, the overall market capitalisation as of September 30, 2024, was N56.635 trillion, an increase of N15.7 trillion or 38.4 per cent over the N40.918 trillion it closed for trading in 2023.

In addition, the Nigerian Exchange Limited All-Share Index (NGX ASI), closed September 30, 2024, at 98,558.79 basis points, about 31.8 per cent average investors return from 74,773.77 basis points the stock market closed for trading 2023.

The reforms by the federal government and that of the CBN have played a critical role in the stock market performance in nine months.

The reforms in the foreign exchange market and the hike in MPR have impacted mixed trading in fundamental companies listed on the Exchange and it has contributed to foreign investors’ uptick in the market.

Specifically, 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 in 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.

Capital market analysts have attributed the stock market performance in nine months of 2024 to mixed corporate earnings by listed companies, FG’s reforms in the foreign exchange market and fuel subsidy removal.

Responding to market performance, Vice President of Highcap Securities Limited, David Adnori stated that investors are trading based on sentiment.

He stated that the emergence of President Bola Tinubu further energised the stock market since market participants had hope in his ability to rebuild the economy and implement economy-friendly policies.

Adnori, however, was optimistic that the stock may maintain its positive momentum in H2 2024, on the backdrop of banking sector recapitalisation and expected H1 2024 corporate earnings by most especially the banks listed on the Exchange.

Amid a 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.