The Nigerian equities market gained N8.416 trillion in nine months as investors’ positive sentiment toward the market was sustained.
Since the beginning of the year, the equities market has witnessed an unprecedented rally and buying interest across sectors, especially in the financial services, consumer and industrial goods sub sector which has continued to trigger massive bargain hunting in large company shares, pushing the key performance indices and stimulating activities in the market.
The market capitalisation gained N8.416 trillion from N27.915 trillion at the beginning of the year to close at N36.331 trillion at the end of September 29, 2023. Similarly, the Nigerian Exchange (NGX) Limited All-Share Index (ASI) rose by 29.52 per cent from 51,251.06 points on December 30, 2022 to 66,382.06 points on September 29, 2023.
Also, the stock market in the third quarter recorded a growth of 8.88 per cent, but however for the month of September, equities declined by 0.25 per cent.
Recent released reports by the NGX on domestic and foreign portfolio participation in equities trading for the month of September 2023 showed that foreign portfolio investors have started to increase their stake in the market.
The chief executive officer of Crane Securities Limited, Mike Ezeh said,the emergence of President Bola Tinubu further energised the market since market participants have hope in his ability to rejig the economy and implement economy friendly policies.
“The elections came and was hitch free against all unification of the multiple exchange rates, review of monetary and fiscal policies, shake up of major changes carried out at the apex bank and its overflow down to the deposit money banks across the country brought stability to the market.
“The commissioning of the first indigenous private refinery which has cyclical effect on both upstream and downstream operations of petroleum companies quoted in the market propelled the interplay in the market by some high-net-worth investors on many quoted companies resulting in high turnover in trading volumes of those companies leading to the significant increase in market capitalisation within the period,” he said.
He urged the new government to continue to implement policies that would provide an enabling environment for businesses to thrive, saying this would help boost the nation’s Foreign Direct Investment (FDI) and attract issuers to the capital market.
Analysts at Proshare added that, “the key drivers of the growth of the domestic Nigerian bourse have been the steady growth of the domestic money supply, which has lubricated economic spending post-COVID-19. The money supply tap has not turned off or back since the heart of the COVID-19 era; the monetary authority continued to accommodate fiscal spending overruns through the Central Bank of Nigeria’s Ways and Means (W&M) window up until 2023, when it securitized the outstanding N22.7 trillion by converting it into a long-dated (40 years) bond at a coupon rate of nine per cent per annum.
“High extra-budgetary expenditure and rising interest rates combined to attract investors to federal bonds and bills but also. saw investors take advantage of the usual growth in banking sector earnings when interest rates rise. Banks listed on the NGX have seen major price increases in the last 12 months.”
They noted that the broad NGX one-year return has shown market resilience to pounding inflation, explaining sustained investor equity market interest.
On market outlook in Q4, the chief operating officer of InvestDataConsulting Limited, Mr. Ambrose Omordion said “we expect mixed sentiment on bargain hunting and portfolio repositioning ahead of Q4 in the face of sector rotation. As all eyes are on the monetary policy drive of the New Central Bank of Nigeria (CBN) Governor and his team.
“However, pullbacks are creating ‘buy’ opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment direction eventually.
“We note that discerning investors have continued to target fundamentally sound companies and defensive stocks to protect their portfolios. Any pullback at this point may add more strength to upside potentials. As such, investors should take advantage of price rally to take profit, while also looking at the trends and events across the globe and domestically.”