Equity investors who have endured long periods of bearish sentiments on the floor of Nigerian Exchange Limited (NGX) had cause to smile as their wealth rose to N5.3 trillion in the first six (H1) of 2023 amid audacious macroeconomic reforms under the new administration.
This came about despite the rising inflation, social unrest, global uncertainty and other economic challenges which surely had an impact on the market during the early part of the year. The market has rallied amid buying interest from investors, especially in bellwether stocks.
For instance, the NGX All Share Index (ASI), an indicator which is used to measure the performance of listed firms on NGX, hit a 15-year high for the first time since 2008 and crossed 60,000 index points, to close at 60,968.27 points as against an opening value of 51,251.06 (January 3, 2023), implying an increase of 8,717.21 or 18.96 per cent. Similarly, the market capitalization of listed companies, which had opened the year at N27.915 trillion, closed on Friday, June 30 at N33.197 trillion, representing a gain of N5.3 trillion in six months (H1) of 2023.
Reacting to the performance of the market, operators noted that the policies of the new administration under President Bola Tinubu which includes the harmonization of different exchange rates and the floating of the Naira at the Investors and Exporters window had led to the rise in the fortunes of investors. Recall that the persistent cash crunch, soaring inflation and the uncertainties in the build-up to the 2023 elections dampened the mood of investors as they activated the “cautious attitude” to stock trading. But sentiments started improving as the cash crunch eased and impressive corporate results came in.
The Chief Relationship Officer, Foresight Securities and Investments Limited, Charles Fakrogha, said the smooth transition of power alongside bold reforms led to the rise in market capitalization. He also noted that the huge volumes of shares traded recently meant foreign investors might be thinking about making a comeback into the equities market. As at Friday, June 30, 2023, a total of 998.08 million shares valued at N15.96 billion were exchanged in 10,580 deals.
“Investors were uncertain about the elections in February and we saw that the naira redesign implementation flopped badly. Then interest rates were continuously raised by the Central Bank of Nigeria (CBN). Inflation was actually on the minds of investors, but again we saw the smooth transition as well as bold policy statements from President Tinubu on May 29. This has led to the gains and positive sentiments the market is currently experiencing,” he said.
Fakrogha, however stressed on the need for the present administration to establish a cabinet and forge ahead with its plans for the nation as this will stimulate activities in various sectors of the economy and revive the capital market.
The Chief Executive Officer, NGX, Mr Temi Popoola had said NGX is looking to collaborate with the new administration to develop the right policies that will steer market development and drive more listings. “We are looking to collaborate with the new administration to develop the right policies that promote listings in our market with the support of stakeholders like the Chartered Institute of Stockbrokers (CIS), Association of Securities Dealing Houses of Nigeria (ASHON), Association of Issuing Houses of Nigeria (AIHN) and other.