Share prices at the Nigerian stock market rallied to their highest level yesterday.
A positive sentiment on ongoing economic reforms and corporate earnings drove the pricing gauge for the Nigerian market to a new threshold.
The All-Share Index (ASI) – the benchmark index that measures pricing trend at the stock market, crossed the 70,000 mark to close yesterday at 70,581.76 points. It was the first time the index reached the 70,000 points.
With this, the average year-to-date return for the Nigerian equities rose to 37.7 per cent, implying that investors had netted N10.52 trillion in capital gains so far this year.
Yesterday’s feat underlined the continuing rally at the Nigerian stock market, after the market had on August 29, 2023 surpassed its previous all-time record to set a new record at 66,490.34 points. The previous highest index point was 66,371.20 points recorded on March 05, 2008.
The ASI, a value-based common index that tracks all share prices at the Nigerian Exchange (NGX), is widely regarded as Nigeria’s sovereign equities index, a barometer of pricing trend and investors’ return at the nation’s stock market.
The ASI rose on the back of intense and widespread bargain-hunting to close at 70,581.76 points, an increase of 1.94 per cent on 69,236.19 points recorded as the opening value. It had opened 2023 at 51,251.06 points.
Aggregate market value of all quoted equities rose from its opening value of N38.039 trillion to close at N38.78 trillion, an increase of N739 billion. It had opened 2023 at N27.915 trillion.
There is analysts’ consensus at the stock market that the bullish trend witnessed in recent period was driven partly by positive investors’ perception of the pro-market administration of President Bola Tinubu.
“The market has been on an upward trajectory since the entry of the new administration led by President Bola Tinubu, due to proactiveness in implementing necessary reforms such as the removal of petrol subsidy and the liberalization of the foreign exchange market,” the NGX stated yesterday, explaining the exceedingly bullish market.
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The NGX noted that “the remarkable milestone has stirred a frenzy of excitement among investors and ignited fervent discussions about the nation’s economic future”.
“The historic high of the Nigerian stock market has created ripples in the global financial arena, with investors keenly observing the nation’s economic trajectory. Although it does not guarantee prosperity, it does signify global recognition of Nigeria’s vast potential. The hope is that this extraordinary accomplishment will lead to improved living standards for Nigerians and bolstered economic stability for the nation,” the NGX stated.
Trading data had shown that while foreign investor participation has been fluctuating, although better than previous records; Nigerian domestic investors have shown stronger positive sentiment, with increased allocation into equities. Already, total transactions in the equity market rose to N2.71 trillion by the end of third quarter ended September 30, 2023; 38 per cent higher than the corresponding period of 2022.
Analysts were excited about the market performance, noting that the 70,000 points represented a major breakthrough for the market.
Afrinvest Securities described the market performance as “historic”, although it expected the capital gains to lead to profit-taking and intermittent negative closing.
Cordros Securities said the market rose above “psychological mark”, referencing the importance of the new threshold.
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SCM Capital stated that “buy interest persists” at the stock market, underlining investors’ perception and prospects for the equities market.
Nigerian equities had rallied net gain of N1.708 trillion in October 2023 as investors reacted positively to better-than expected corporate results.
Despite concerns over macroeconomic challenges, most companies have shown resilience with considerable improvements in profitability.
Month-on-month analysis had shown that the market capitalisation rose by N1.708 trillion from N36.331 trillion at the beginning of the month to close at N38.039 trillion on October 31, 2023. The ASI also rose by 4.30 per cent from its month’s opening index of 66,382.14 points close October 2023 at 69,236.19 points.
Managing Director, Highcap Securities, David Adonri, said the gain reported by the equities market in October showed impressive nine-month results, noting that foreign investors were turning to Nigerian stocks.
According to him, the overall market performance is driven majorly by sentiment arising from the smooth handover and President Bola Tinubu’s bold economic policy on foreign exchange.
He outlined that Tinubu prompt change of security chiefs also boosted investors’ confidence. The removal of Godwin Emefiele as Central Bank of Nigeria (CBN) Governor was another icing on the cake which impressed investors. All these added to the usual end-of-quarter rally to propel the equities market.
“Since the huge gain was propelled by investor sentiment, interest in equities in second half, 2023 can only be sustained if the policy changes translate into growth in corporate fundamentals and a fall in interest rate, otherwise, we might see a market correction that may purge equities off the sentiment that inflated it in seven months of 2023,” Adonri said.
One of Africa’s leading investors and entrepreneurs, Mr. Tony Elumelu had recently said the current economic atmosphere in Nigeria offers the best opportunity for good returns for investors.
Elumelu owns the single largest stakes in several publicly quoted companies including United Bank for Africa (UBA) Plc, Transnational Corporation of Nigeria (Transcorp) Plc, Transcorp Hotels Plc, United Capital Plc and Africa Prudential. Elumelu’s Heirs Holdings also own major stakes in insurance, real estate, power and financial services companies.
Providing an entrepreneurial investor’s perspective to a global audience at the Nigeria-India Presidential Roundtable and Conference in New Delhi, India, Elumelu cited his personal experience, corporate records and researches that underlined a robust outlook for the Nigerian economy.
He urged the Indian private sector to seize the opportunity to invest in Nigeria, noting that Nigeria s a large market with immense opportunities for foreign investors.
“This is the time to invest in Nigeria. I speak as a private sector investor in Nigeria, the companies in our group’s investment portfolio demonstrate the opportunity. I believe you also can take advantage of our track record and success.
”Nigeria is a huge market; over 200 million people with the largest economy on the continent. Most importantly, the population is not just over 200 million people; the demography of the population is exciting. We have a cohort of young people who are there to consume, and we also have people who are intelligent, energetic, hardworking, who provide the human capital that investors need to drive their businesses,” Elumelu said.