NGX Delivers Impressive Returns Despite Economic Cracks
The equities market capitalisation of the Nigerian Exchange (NGX) increased by N13 trillion in 2023 despite cracks in the economy. In the first trading week, the market also added about N2.7 trillion as a gain from sustained bargain hunting.
Based on the sterling performance, the local bourse remains the only investment vehicle providing inflation-protected returns to investors who traded highs and lows in the market during the year.
The resurged interest in the stock market was driven by improved sentiment by local investors. Foreign investors have been unstable due to falling macroeconomic indicators and policy direction.
Despite the naira crisis and election, the local bourse ended 2023 in-ground style, hovering about N40 trillion market. Market return was impressively printed at 45% while Nigerian Indexes experienced massive rerating in line with associated risk beta.
Returns remain strong despite weak macroeconomic indicators. Inflation has been uptrend, and the naira has plunged significantly. The investment environment has remained largely eclipsed by changing market dynamics. However, the stock market stays strong with a solid return on investment.
Equities Investors See Good Start to 2024
The market rallied over the first four days of the New Year, marking a good start to the New Year. According to stockbrokers, key performance indicators surged by 6.54%, propelling the index to an impressive 79,664.66 points, close to a psychologically significant 80,000-point threshold.
Emanating from what appears to be the January effect, this upward trajectory signifies a substantial demand for Nigerian stocks, setting the stage for the imminent reporting and dividend-earning season, Cowry Asset said in a note.
A total turnover of 3.320 billion shares worth N41.755 billion in 46,994 deals was traded this week by investors on the floor of the Exchange. In contrast to a total of 1.186 billion shares valued at N31.425 billion that exchanged hands last week in 23,969 deals.
The Financial Services Industry (measured by volume) led the activity chart with 2.399 billion shares valued at N26.054 billion traded in 22,833 deals; thus contributing 72.25% and 62.40% to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 213.139 million shares worth N2.434 billion in 2,284 deals. The third place was the Oil and Gas Industry, with a turnover of 163.313 million shares worth N2.054 billion in 3,443 deals.
Trading in the top three equities namely Fidelity Bank Plc, FCMB Group Plc and Sterling Financial Holdings Company Plc (measured by volume) accounted for 767.964 million shares worth N7.289 billion in 4,589 deals, contributing 23.13% and 17.46% to the total equity turnover volume and value respectively.
Across various sectors, the bullish trend manifested prominently, with the financial services sector, in particular, witnessing significant advancements. The Banking and Insurance stocks led gainers, exhibiting increases of 10.29% and 14.08%, respectively.
Looking ahead into the new trading week, Cowry Research opines that the market is poised for mixed sentiment, potentially influenced by profit-taking activities within the local market. Dangote Reacts to EFCC Visit to Headquarters
As the All Share Index approaches the psychological threshold of 80,000+, market participants are expected to position themselves strategically and take considerable advantage of the price corrections. Overall, equities market capitalisation rose by N2.68 trillion, reaching N43.59 trillion.
