The Nigerian stock market ended the first month of the year 2023 on a strong positive note as investors’ investment went up by N1.083 trillion.
Reviewing stock market activities in January, the basic indicators of the Nigerian Stock Exchange (NSE), All-Share Index gained 3.88 per cent to close on January 31, 2023 at 53,238.67 basis points, from 51,251.06 points at which it opened for the year.
Market capitalisation for the period rose by N1.083 trillion to close at N28.998 trillion as at January 31, 2023 from N27.915 trillion.
The sectorial performance was positive as at January 27, 2023. The NGX Banking index recorded the highest rise during the month with a gain of 6.83 per cent. The NGX Oil & Gas index followed with a monthly gain of 5.41 per cent, while NGX Pension index rose by 4.09 per cent in the month of January.
NGX Insurance index recorded a monthly gain of 3.59 per cent, while NGX Lotus II index achieved 3.58 per cent monthly gain. Others are NGX Consumer Goods, NGX Premium Board, NGX 30 and NGX Industrial Goods indices recorded a monthly gain of 5.56 per cent, 3.52 per cent, 2.99 per cent and 2.03 per cent, respectively.
Capital market analysts said, January was a great month as the Nigerian stock market started the year 2023 on a bullish note, driven by positive sentiment from corporate earnings expectations.
Speaking on market performance, the chief operating officer of InvestData Consulting Limited, Mr Ambrose Omordion, said the nation’s stock market performance maintained the uptrend momentum from last year.
He noted that, this performance follows the rekindled buying interest in blue chip companies, especially, those with high dividend yields and strong growth prospects as all eyes are on expected corporate earnings and actions from early filers.
To him, “also, sentiments continue to be positive and upbeat in the face of mixed interest rates and government bonds tumbling on last weekend’s downgrade of Nigeria by Moody’s following anxieties over the coming general elections, especially given the spate of violence across the country, as well as rising public debts, among others.”
On market outlook, Omordion said: “we expect positive sentiment to continue on position taking as portfolio rebalancing in the midst of divergence in fixed income rates and MPR adjustment to 17.5 per cent, in the face of fourth quarter (Q4) earnings expectations and election uncertainty.
“Any pullback at this point may add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”
Speaking with LEADERSHIP, vice president, Highcap securities Limited, Mr. David Adnori said, the anticipation for end-of-the-year dividend distribution lifted the stock market in January 2023, saying, “the performance of the stock market in January is driven by shareholders’ expectation for the end of the year earnings and distribution of dividends.”
Speaking on the outlook of the stock market in 2023, the managing director/chief economist at Analysts Data Service and Resources Limited, Dr. Afolabi Olowookere, disclosed that while recent evidence suggests the market performance during pre- and post-elections comes out negative, it is expected that the stock market might close in the negative territory at the end of the year.
According to him, the past may not necessarily be the one we might see in future. In the last three years of election, the market had closed in the negative and so looking at it, stock market returns might likely close at -16 per cent at the end of the year and this will be centered on factors like uncertainties around the outcome of the elections, low capital inflows and rising inflation.
Analysts at Investment One in a report titled, ‘2022 review and 2023 macro-economic and financial market outlook’ said, the direction of market performance will be largely determined by the trio impact of fixed income yields in tandem with monetary policy, corporate actions, and election turnouts.
“Ditto to our outlook of tepid movement in yields in the fixed income space and expectations of a less aggressive hawkish tone from the CBN, negative real returns should remain relatively high in the fixed income space giving room for alpha-seeking investors diverting more funds to equities as it remains a solid channel for positive real returns.
“For Corporate earnings, we are cautiously optimistic of a positive earnings performance in 2023 given the negative impact of high inflation pressures, increased monetary policy tightening and FX instability. Although we expect a broad-based resilient performance, we do not see a significantly upbeat performance as the aforementioned factors remain deterrents,” the report added.
A group of analysts at Emerging Africa in a report projected that the Nigerian stock market would maintain its positive trend in the near term, backed by positive corporate financial performance and impressive dividend payout from the dividend payment stocks.