Equity investors have made trillions of naira as gains from trading in listed equities on the Nigerian Exchange Group (NGX) following a renewed interest in Nigerian stocks since the beginning of this year, a trend that was sustained immediately after President Bola Ahmed Tinubu was sworn in on May 29, 2023.
The surge in prices of listed stocks was attributed by market watchers to the implementation of pro-market policies such as the removal of fuel subsidy and unification of the different exchange rates in a bid to eliminate economic rent seeking.
The gains in the values of listed equities, otherwise known as market capitalisation, increased to N5.82 trillion as at half year 2023, implying that on the average, investors’ wealth increased daily by N29.35 billion in the first half 2023.
Analysing equity values on a month-by-month basis, the market capitalisation of listed equities increased to N33.197 trillion on June 30, making it the highest market capitalisation year to date. Compared to N30.366 trillion at the end of May, the monthly gains in the values of listed equities rose to N2.83 trillion, the highest year to date, a trend analysts at Afrinvest attributed to the implementation of various economic reforms by the new federal administration.
“The local bourse ended the second quarter of 2023 on a positive note. This was driven by renewed investor optimism as the new administration began an early implementation of expected pro-market policies. Against this backdrop, the NGX-ASI rose 9.3% m/m to 60,968.27 points. Consequently, YTD return of the market rose to 19.0% against 8.8% in the prior month while market capitalisation advanced ₦2.8tn to ₦33.2tn,” Afrinvest Research stated in a note to investors.
According to the market data sourced from the Nigerian Exchange Group (NGX), the market capitalisation of listed equities closed at N28.997 trillion on January 31, which resulted in a monthly gain of N1.08 trillion.
Capitalisation increased to N30.4 trillion on February 28, resulting in a monthly appreciation in equity values to the tune of N1.40 trillion. By March 31, the market capitalisation of listed equities closed at N29.54 trillion, resulting in a monthly loss of N856.96 trillion. However, year to date, listed equities recorded N1.628 trillion appreciation at the end of the first quarter of 2023.
The bearish run that started in March, occasioned by a number of factors including the hawkish stance of the Central Bank of Nigeria, which persistently hiked the Monetary Policy Rate, continued at the beginning of the second quarter of 2023.
The data showed that market capitalisation closed further lower in April at N28.53 trillion, resulting in a monthly loss of N1.009 trillion, while the year-to-date gain fell to N618.83 billion.
The return of positive sentiment in the market, spurred by the new administration in the country, caused an upward movement in market capitalisation which gained N1.83 trillion in May, further pushing the year-to-date gain to N2.45 trillion.
In June alone, equities gained N2.83 trillion, and increased the year-to-date gain in market capitalisation to N5.28 trillion.
Another market metric, the All Share Index (ASI) closed at 60,968.27 points, setting a new record in the nation’s capital market. Compared to ASI’s closing figure of 51,251.06 points on the last trading day of 2022, the Nigerian capital market set a new record at half year, posting 18.96 percent returns year to date.
Outstanding sectoral indices as of half year 2023 include NGX Oil/Gas Index which posted 67.76 percent returns; NGX Insurance Index,58.49 percent; NGX Banking Index, 54.59 percent; NGX MER Value Index, 53.52 percent, and the NGX Consumer Goods Index, 51.93 percent, among others.
