Stock Market Gains N10.12tn in 10 Months

•Bourse’s benchmark hits all-time high in October

Kayode Tokede

The stock market gained N10.12 trillion in the first 10 months of 2023, as investors continued to take advantage of the cheap prices of stocks quoted on the floor of the Nigerian Exchange Limited (NGX).

Most stocks with strong fundamentals have appreciated significantly in the last 10 months, outpacing inflation rate amid move by the Central Bank of Nigeria (CBN) to unify the naira at the foreign exchange market.

Precisely, the market capitalisation closed yesterday, at N38.039 trillion, gaining N10.12 trillion, when compared with the N27.917 trillion it opened for trading this year.

The All-Share Index, an index that tracks the general market movement of all listed equities on Nigerian Exchange, including those listed on the Growth Board, crossed the 69,000 mark in October 2023 to close at 69,236.19 basis points. It gained 35.1 per cent compared with the 51,251.06 basis points the stock market opened for trading in 2023.

The 69,236.19 basis points was a new record- high as the stock market continued on a positive trajectory under President Bola Tinubu’s economic reforms. 

However, THISDAY’s analysis showed that the stock market gained N1.708 trillion in the month of October 2023 alone, as investors reacted to better-than expected corporate results released on the bourse.

The month of October was eventful, marked by the influx of impressive corporate earnings reports at its peak. The better-than-expected corporate earnings despite the gloomy economy impacted the market positively at a time rising inflation had left fixed income market instrument in negative real returns.

The strong numbers came majorly from the service-oriented companies on the Exchange, cutting across banking, insurance, energy, power, agribusiness, construction and aviation service companies.

The market capitalisation gained N1.708 trillion from N36.331 trillion at the beginning of the month to close at N38.039 trillion at the end of October 31, 2023. Similarly, the NGX ASI rose by 4.30 per cent from 66,382.14 basis points on September 29, 2023, to 69,236.19 basis points on October 31, 2023.

Also, sector performance was bullish as most indices closed the period on uptrend as of October 27, 2023. NGX Banking index appreciated the most by 5.27 per cent month-on-Month (M-o-M). NGX Industrial Goods index followed with a monthly gain of 3.35 per cent, while NGX Oil & Gas index rose by 2.38 per cent.

Others were NGX 30, NGX Consumer Goods and NGX Pension indices that went up by 1.11 per cent, 1.06 per cent and 0.18 per cent respectively. On the other side, NGX Premium index, NGX Insurance and NGX Lotus II indices recorded monthly decline of 4.40 per cent, 4.24 per cent and 0.85 per cent respectively.

In October, the NGX listed N92.53billion first local currency-denominated infrastructure investment trust fund in Nigeria and Sub-Saharan Africa, Nigeria Infrastructure Debt Fund (NIDF) on NGX.

Also, in October 6, 2023, VFD Group Plc got listed on the main board of NGX, adding over N45 billion to the market capitalisation of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.

Responding to the performance of the stock market the Vice President of Highcap Securities, David Adonri, said the gain reported by the equities market in October, was on the backdrop of impressive nine months ended September 30, 2023, corporate earnings, stressing that foreign investor, most especially, utilised the cheap price of some fundamental stocks on the bourse.

He added that the overall market performance was driven majorly by sentiment arising from the smooth handover and President Bola Tinubu’s bold economic policy on foreign exchange.

According to him, Tinubu prompt change of security chiefs also boosted investors’ confidence.

“Since the huge gain was propelled by investor sentiment, interest in equities in H2, 2023, can only be sustained if the policy changes translate into growth in corporate fundamentals and a fall in interest rate, otherwise, we might see a market correction that may purge equities off the sentiment that inflated it in seven months of 2023.”

Speaking on market performance for October, the Chief Operating Officer of InvestData Consulting Limited, Mr Ambrose Omordion said, “trading on the Nigerian Exchange last month was buoyed by renewed buying interest after sell sentiments, which had pulled the market down in September, as more impressive corporate scorecards were made available to the investing public in the face of high volatility, increasing liquidity and macroeconomic headwinds.”

He stated that many companies across various sectors posted impressive numbers, while some recorded mixed performance and others were disappointing.

On market outlook, Omordion said, “we expect buying sentiments to continue as investors and bargain hunters react to the better-than-expected corporate numbers released so far.

“As more Q3 earnings reports are expected in the face of sector rotation. Meanwhile, all eyes are on the fiscal and monetary authorities to give direction of the government reforms and policies so far.”

He, however said, “pullbacks are creating ‘buy’ opportunities amidst the economic reforms of the government, just as more policy pronouncements and economic managers hit the ground running, a situation expected to offer investment direction eventually.”

Meanwhile, the naira depreciated to N1180/$ on the parallel market yesterday, compared to the N1,110/$ it closed the previous day.

On the Investors and Exporters FX window, the naira closed at N815.32/$1, stronger than the N993.82/$ it closed on Monday.