In a remarkable display of resilience and buoyancy, the Nigerian equities market has outpaced its African counterparts in South Africa, Kenya, and Morocco, posting an impressive 41.27% market return year-to-date (YTD). This surge, driven by pivotal reforms such as the removal of the petrol subsidy and the liberalization of the foreign exchange market, has positioned Nigeria as a standout performer in the region.
The Santa Claus rally, typically a year-end phenomenon, arrived early this month, propelling stock returns higher despite intermittent profit-taking activities. Investors, particularly in the oil and gas, banking, consumer goods, and insurance sectors, have played a pivotal role in driving the market’s gains. New listings on the Nigerian Exchange Limited (NGX) throughout the year have also contributed significantly to the market’s upward trajectory, resulting in a remarkable increase of N11.69 trillion in 2023.
Comparatively, South Africa’s Johannesburg Stock Exchange FTSE/JSE All Share Index recorded a 5.44% YTD increase, while Kenya’s Nairobi Securities Exchange experienced a negative 28.07% performance. Morocco’s market, on the other hand, saw a modest rise of 9.74%.
The Nigerian equities market opened the year with an All Share Index (ASI) and equities capitalization at 51,251.06 points and N27.915 trillion, respectively. As of December 15, these figures soared to 72,389.23 points and N39.613 trillion, reflecting the market’s robust performance throughout 2023.
Key contributors to the market’s growth include the listing of the Nigeria Infrastructure Debt Fund (NIDF), VFD Group, and Mecure Industries, collectively contributing N151 billion to the equity market capitalization. Additionally, Exchange Traded Funds (ETFs) witnessed substantial growth in turnover, recording a 343.5% increase from N191.58 million to N849.71 million as of November 2023.
United Capital research analysts anticipate positive developments in the second half of the year, citing the new administration’s policies, including the unification of the exchange rate and advocacy for a lower interest rate environment, as significant drivers for increased investor confidence.
The Nigerian equities market has embraced technological advancements, signing memoranda of understanding with the Pan-African Payment and Settlement System to enhance cross-border trading. The recent launch of the USSD Code *5474# brings the market closer to retail investors, allowing them to access capital market data and initiate trading processes directly from their mobile phones.
Despite concerns raised by Lamido Yuguda, Director General of the Securities and Exchange Commission (SEC), regarding the recent reclassifications of Nigerian securities indices by FTSE-Russell and MSCI, the Nigerian stock market has reached an all-time high. The NGX All-Share Index has crossed the 72,000-point mark, even in the face of challenges such as foreign exchange liquidity issues.
As of October, equities trading on the NGX reached N2.933 trillion, with foreign investors accounting for N291.38 billion (9.93%) and domestic investors contributing N2.642 trillion (90.07%). The Central Securities Clearing System reported a 23% growth in average daily clearing and settlement value to around N10.7 billion in the third quarter of 2023.
The equity market’s vibrancy is further reflected in the performance of top stockbroking firms. Cardinalstone Securities Limited led the league, accounting for 12.77% of the total value of equities traded, followed by Stanbic IBTC Stockbrokers Limited (7.97%) and APT Securities & Funds (7.24%).
Oil and gas stocks have played a significant role in driving the market higher, with notable performers including MRS (644.7%), Japaul Gold (467.9%), Conoil (216.6%), and Oando (166.6%). The banking sector has seen remarkable interest in shares such as UBA (217.8%), Sterling Bank (198.6%), Access Corporation (161.2%), and Fidelity Bank (117.2%).
In the consumer goods sector, Northern Nigeria Flour Mills recorded an impressive 530.1% rise, alongside other notable performers like NASCON (386.5%), BUA Foods (206%), Dangote Sugar (258.3%), and PZ (129.1%).
The OTC Securities Exchange and FMDQ Exchange have also experienced positive performance, with the NASD Securities Index increasing by 17.1% YTD and the FMDQ Exchange securing regulatory approvals for additional Exchange-Traded Derivatives products.
Despite challenges, the Nigerian equities market stands as a shining example of resilience and growth, attracting both local and international investors amid a dynamic economic landscape.
