Nigeria’s Stock Market Sustains Positive Momentum, Gains N4.5trn in Four Months

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*Outperforms other African exchanges

Kayode Tokede

The stock market segment of the Nigerian Exchange Limited (NGX) has gained N4.46 trillion in its year-to-date (YtD) performance, outperforming the Egyptian Exchange, the Johannesburg Stock Exchange, the Ghana Stock Exchange, among other of its peers in the continent.

Specifically, the market capitalisation of the NGX in the first four months of 2022 appreciated by 16.21 per cent to close on April 29, 2022  at N26.761 trillion from the N22.297 trillion it closed on the last trading day of 2021
Also, the NGX All-Share Index, an indicator used to track the general market movement of all listed equities on NGX, including those listed on the growth board, regardless of capitalisation, opened 2022 at 42,716.44 basis points and closed on April 29, 2022.  at 49,638.94 basis points.

This also represented an increase by 16. 21 per cent.
However, data compiled from the website of other stock exchanges in the continent revealed that the Financial Times Stock Exchange (FTSE)/ Johannesburg Stock Exchange (JSE) in its YtD performance dropped by 1.72 per cent, just as the Egyptian Exchange’s EGX 30 Index in its YtD performance also dropped by 7.54 per cent.

Further findings revealed that the Casablanca Stock Exchange’s MASI Index in its YtD performance depreciated by 1.66 per cent, while the Ghana Stock Exchange Composite Index contracted by 3.52 per cent to 2,691.19 index points as of April 29, 2022.

Similarly, the Uganda Securities Exchange’s (USE) All Share Index was down by 12.23 per cent YtD performance to 1,246.99 basis points as of April, 2022.

On the flipside, the Lusaka Securities Exchange’s All-Share Index recorded an impressive performance with a gain of 14.27 per cent to 6,924.34 in its YTD growth just as the Namibian Stock Exchange’s NSX overall Index appreciated by 10.64 per cent to 1,738.93   points as of April 29, 2022.

However, for the Nigerian bourse, the NGX, the major indices that drove its performance in the first four months of 2022, were the banking, oil & gas, industrial and consumer goods companies sectors.
The growth in stock prices were strongly bullish as all the indicators closed in the green between January and April of 2022.

For instance, the NGX Oil & Gas index appreciated the most by 51.99 per cent in its YtD growth; the NGX industrial goods index followed with a gain of 8.81 per cent, while the NGX Banking Index rose by 7.08 per cent YtD.

Capital market analysts attributed the growth of the NGX to steady increase in global oil price and listed companies’ impressive earnings post-covid-19.

They explained foreign analysts’ projections of Nigeria’s economy pre-election also played a critical role in foreign investors’ increased participation in fundamental stocks listed on the bourse.

The International Monetary Fund (IMF) recently raised Nigeria’s 2022 economic growth forecast marginally from the 2.7 per cent it had previously estimated to 3.4 per cent.
Additionally, the fund reviewed upward the country’s 2023 growth prediction upward from 2.7 per cent to 3.1 per cent.

The multilateral institution had also noted that the non-oil sector played a pivotal role in increasing Nigeria’s growth prospect as it observed that the globally only 86 per cent of countries saw a downward revise of its growth projection indicating Nigeria is amongst the 14 per cent of countries who are expected to grow.

Nigeria’s growth prospects were stated in  latest World Economic Outlook (WEO) released recently by the IMF.
Also, the World Bank had released a forecast on Nigeria’s economy for 2022, raising the country’s growth projection to 3.8 per cent, up from the 2.5 per cent projected earlier in the year.

Speaking with THISDAY, the doyen of the Nigerian capital market, Mr Rasheed Yusuf, said the increasing global oil price  played a role in the growth of the capital market in four months of 2022.

According to him, “The current global oil price that is above $100 per barrel has translated into more revenue for the federal government and more spending. “Since there is more revenue for the government, there will definitely be more spending and more business opportunities for individuals and companies listed on the NGX.

“Everybody was thinking Nigeria will be in an economic crisis but with oil revenue above $100 per barrel over the Ukraine-Russia crisis, the government has been able to manage the subsidy.

“The global oil price has breathed a new life into companies in the country and investors’ expectation is that these companies will make good profit and it has contributed to growth in their stocks.

“Most of them recently released the 2021 financial year, first quarter results and we have seen impressive corporate earnings. The performance of these companies has reflected in their corporate earnings.”
Yusuf, who is the Chief Executive Officer of Trust Yield Securities, further said the Nigeria economy had surpassed analysts’ expectation.

“It is not as boom but at the same time, it is not catastrophic as projected by analysts and that is what is driving the optimism,” he added.

On his part, the Chief Operating Officer (COO), Supra Commercial Trust Limited, Mr. Charles Fakrogha, noted that the steadfastness of the quoted companies boosted the capital market growth in four months of 2022.

He also alluded that the increasing global oil price contributed to stock market performance as the government has more revenue to execute some infrastructural projects.

According to him, “These companies have sustained growth in revenue and profit despite challenges.
“With the improved performance, of course the market will react and the reason why investors trading on the NGX stock market gained over N4 trillion in four months.”

He projected that the stock market would sustain the growth in May 2022.
He said, “The listed companies have device methods to overcome harsh operating environments and of course, they still have some challenges.

“We expect the stock market to perform better in the remaining months of H1 as the government is expected to do its part in tackling the security situation in the country.”

In his contribution. the Chief Operating Officer, InvestData Ltd, Mr. Ambrose Omordion noted that most listed companies were undervalued as covid-19 affected their performance, stressing that local & foreign investors in the first four months of 2022 took advantage of the low-priced stocks.

He added, “Most companies have engaged in aggressive revenue growth when the lockdown was eased and we have seen the impact on profit.

“The global trend is also playing its role in what is happening in Nigeria. In the USA, most big companies are posting negative results and it is reflecting in their GDP.

“However, Nigeria’s big companies on the NGX have reported positive performance and it is likely to show in GDP projection for Q1 2022.”