10 Bluechip Firms Sustain Dominance with N25.4tn Contribution to NGX Market Cap

Kayode Tokede

Propelled by the federal government’s policy on foreign exchange and fuel subsidy, 10 leadings companies on Nigerian Exchange Limited (NGX) suatained their dominance of the local bourse in the first half (H1) 2023 contributing a commulative N25.4 trillion to overall N33.198trillion market capitalisation during the period.

As a result of the significant gain by these 10 companies, investors on the NGX who have endured long periods of bearish sentiments had cause to smile as their wealth grew by N5.3 trillion in H1 amid audacious macroeconomic reforms under the new administration.

This is as Nigerian stocks climbed to a 15-year high due to price appreciation in bellwether stocks such as MTN Nigeria Communication Plc, Dangote Cement Plc, Airtel Africa Plc, BUA Cement Plc, among six others.

Consequently, the NGX All Share Index (ASI), mirrors the direction of the market, reached a 15-year high and crossed 60,000 index points, to close at 60,968.27 basis 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 H1 2023.

Reacting to the performance, operators noted that the policies of the Bola Tinubu administration, which includes the harmonisation of different exchange rates and the floating of the Naira at the Investors and Exporters window (I & E FX) had led to the rise in the fortunes of investors.

Cash crunch, soaring inflation and the uncertainties in the build-up to the 2023 elections dampened investors’ mood leading to “cautious attitude” to stock trading. But sentiments started improving as the cash crunch eased and impressive corporate results came in.

Meanwhile, according to THISDAY investigation, MTN Nigeria Communication as of H1 2023, leads the stock market in capitalisations, followed by Airtel Africa.

MTN Nigeria Communication closed the period under review at N5.56 trillion when its stock price closed at N273.4 per share.

 Airtel Africa moved to N4.96 trillion as its stock price depreciated by 19.27 per cent Year-till-Date (YtD) to N1,319.9 per share from N1,635.00 per share it opened for trading in 2023.

Dangote Cement came third with N4.86trillion in market capitalisation, followed by BUA Cement with N3.12trillion in market capitalisation as of June 30, 2023.

Others are; Zenith Bank, N1.075trillion; Guaranty Trust Holding company Plc (GTCO), N1.03 trillion; Nestle Nigeria, N990.8billion; Stanbic IBTC Holdings, N699.7billion and FBN Holdings, N612billion.  

Capital market analysts attributed the price appreciation in MTN Nigeria among others to the federal government’s foreign exchange policies stressing that these stocks are driven by fundamentals.

The CEO, Wyoming Capital and Partners, Tajudeen Olayinka explained that the stock market rally started way back in November 2022, when it was obvious that the contest for Nigeria’s presidency was between the current President Bola Tinubu and the duo of Atiku Abubakar and Peter Obi.

According to him, “It was obvious we were going to witness a possible transition from government of President Muhammadu Buhari that had public sector dominance as his economic focus, to a new regime that could favour private sector dominance.

“So, all along, market was bullish on transition, and when Asiwaju Bola Tinubu became president and started with a policy thrust that was in agreement with his campaign promises of removal of subsidy and unification of Naira exchange rate, market went agog. Market is actually bullish on President Bola Ahmed Tinubu’s policy thrust.”

He said, “Market will still be very strong in the second half of the year, with possible price moderation in between, as public companies begin to approach the market for possible capital raising at a lower cost of capital. More public companies will get listed on the securities exchanges.”

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.