Investors’ Return in Stock Market Rises to N8.51trn in Eight Months

Kayode Tokede 

Investors at the stock market of the Nigerian Exchange Limited (NGX) are in for robust yield on investment as returns in eight months of 2023 increased by N8.51trilion in market capitalisation.

Investors continued bargain-hunting for fundamental stocks on expectations that foreign exchange reforms by President Bola Tinubu-led government will stimulate significant improvements in the domestic economy.

The rally nudged the average year-to-date return for stock market to 29.8 per cent to 66,548.99 basis points as at the close of trading in August from 51,251.06 basis points it closed in 2022, implying that investors have earned about N8.51 trillion in capital gains between January and August of 2023.

The market capitalisation closed yesterday at N36.423trillion from N27.915trillion the stock market closed for trading in 2022.

 Nigeria’s average return of 29.8 per cent is one of the five highest returns globally, ahead of several advanced and emerging global stock markets.

The stock market performance so far is on the backdrop of 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 such as Seplat Energy Plc, MTN Nigeria Communications Plc, Dangote Cement Plc, Zenith Bank Plc, Guaranty Trust Holding Company Plc, among others. 

The bullish pricing trend at the stock market has also seen a corresponding level of activities.

According to the NGX, market operators were of the view that “the policies of the new administration under President Bola Tinubu” had “led to the rise in the fortunes of investors”.

The NGX stated that the stock market performance was particularly driven by “a surge in banking stocks as investors strategically positioned themselves, taking advantage of the recent record earnings posted by banks”.

Afrinvest Securities had said “economy reform optimism” bolstered the market performance, noting that “the rally in the market followed the promise of critical reforms by the President Bola Tinubu administration”.

The Chief Relationship Officer, Foresight Securities and Investments Limited, Charles Fakrogha, had explained that 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.

“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.