Stock Market Depreciated by N1.01trn in April Amid 2022 Corporate Earnings, Dividend Payout

Kayode Tokede

The stock market of the Nigerian Exchange Limited (NGX) depreciated by N1.01trillion or per cent in April 2023 amid impressive 2022 financial year corporate earnings and dividend payout to shareholders by listed companies.

Although the stock market has gained 2.25 per cent in four months of 2023, inflationary pressure, scarcity of foreign exchange, among other macroeconomy challenges have continued to erode investors’ participation in low-priced fundamental stocks listed on the Exchange.

Specifically, the overall market capitalisation of the NGX closed April 2023 at N28.534trillion, dropping by N1.01trillion or 3.42 per cent from N29.544trillion, while NGX All-Share Index dropped by 3.37 per cent to 52,403.51basis points from 54,232.34basis points it closed for trading in March 2023.

Sectoral performances revealed that NGX-Main Board Index depreciated by 3.71 per cent to close at 2,349.99 basis points, while NGX banking Index was down by 1.55 per cent to 438.07 basis points as of April 28, 2023.

As NGX Insurance Index appreciated by 3.87 per cent to 184.38 basis points, NGX Oil/Gas Index dropped by 1.68 per cent to 502.24 basis points.

In addition, NGX Consumer Goods Index appreciated by 4.75 per cent to 736.14 basis points, the highest gainer among other indices on the floor of the Exchange, while NGX Industrial Goods Index depreciated by 0.38 per cent in April 2023. 

Capital market analysts in a chat with THISDAY attributed the decline in the stock market to 2023 general elections, stating that foreign investors and Pension Fund Administrations (PFAs) were on the side-line to know the outcome of the elections.  

According to THISDAY investigations, the stock market in four months of 2023 has gained N619billion in market capitalisation and 2.25 per cent in  NGX All-Share Index, driven by fundamental stocks in the Oil & Gas, Banking, Industrial goods and Consumer Goods sectors of the Nigeria’s economy.

The monthly breakdown showed that the stock market in January gained N1.08trilliontrillion and in February, it gained N1.40 trillion to close the month under review at N30.400 trillion.

In March, the stock depreciated by N857billion on the backdrop of political tension, inflationary pressure and scarcity of local currency in the domestic economy.

So, In April, the market capitalisation slides further by N1.01 trillion, to eventually closed in four months at N619billion.  

 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.

According to the firm, “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.”