15 Listed Firms Dominate Stock Market Trading with N32.53trn in Capitalisation

.Airtel, Dangote Cement, MTN valued at N16.54tn  .NGX market cap up N10.12tn in 10 months

Kayode Tokede

As the stock market continued on a positive trajectory in 2023, an investigation by THISDAY revealed has that only 15 out of over 150 companies on the Nigerian Exchange Limited (NGX) accounts for 85.5 per cent or N32.53 trillion market capitalisation as of October 2023.

The market capitalisation of all listed companies on the NGX increased to N38.039 trillion from N27.915 trillion it closed in 2022, representing N10.12 trillion year-to-date (YtD) growth in 10 months of 2023.

The 15 companies are: Airtel Africa Plc, Dangote Cement Plc, MTN Nigerian Communications (MTNN) Plc, BUA Cement Plc, BUA Foods Plc, Zenith Bank Plc, and Guaranty Trust Holding Company (GTCO) Plc.

Others include: Nestlé Nigeria, Seplat Energy and Geregu Power, United Bank for Africa Plc (UBA), Access Holdings Plc, Stanbic IBTC Holdings Plc, FBN Holdings Plc

These 15 stocks, otherwise called large cap stocks, dictate market trading direction through positive or negative performance- a company’s stock is generally classified as large-cap, mid-cap or small-cap.

The stock market has recorded an upward trajectory since the entry of the new administration led by President Bola Tinubu. The positive trend, analysts said, is due to the proactive implementation of reforms such as the removal of fuel subsidy and the liberalization of the foreign exchange market.

Foreign investors and High Network Investors have continued to take position in these 15 stocks amid Central Bank of Nigeria (CBN) foreign exchange policies as their prices in the past was undervalued on the bourse. 

The market sentiment for the segment, which comprises of MTN Nigeria, Airtel Africa and Dangote Cement have remained resilient in the face of the pandemic. The combined three companies’ market capitalisation is above the N5trillion threshold each.

Despite dropping by 5.8 per cent YtD to N1,540.10 per share as of October 31, the Airtel Africa’s market capitalisation stood at N5.79 trillion, becoming highest on the Exchange followed by Dangote Cement.

The stock price of Dangote Cement gained 25.67per cent YtD to N328 per share as its market capitalisation closed the period under review at N5.59trillion. 

Positive investors sentiment lifted Dangote Cement’s stock as the cement maker generated N billion profit before in nine months ended September 30, 2023, representing an increase of per cent from N billion reported in nine months of 2022.

Dangote Cement, however, reported N404.89billion profit before in nine months of 2023, a growth of 21 per cent from N335.9billion reported in nine months of 2022.

The Chief Executive Officer, Dangote Cement, Arvind Pathak, in a statement had said the positive nine months result is a combination of our strong value proposition, improved operational efficiency and a sustained drive to contain cost amidst an accelerating inflationary environment.

However, MTN Nigeria’s market capitalisation stood at N5.16trillion when the telecommunication company’s stock price appreciated by 14.42 per cent YtD to close at N246 per share as of October 31, 2023. 

MTN Nigeria declared N147.36 billion profit in nine months of 2023, a decline of 45.2 per cent from N269.04 billion reported in nine months of 2022.

The two BUA companies, BUA Cement and BUA Foods are the only two companies with N3 trillion in market capitalisation.

BUA Foods recorded a total capitalization of N3.65 trillion, while BUA Cement achieved N3.62 trillion capitalization, gaining 9.5 per cent YtD and 212 per cent YtD, respectively.

With the significant increase in profit, Seplat Petroleum, Zenith Bank and GTCO are the only three companies with over N1trillion in market capitalisation as of October 31, 2023. 

Seplat Petroleum recorded N1.121trillion in market capitalisation, while Zenith Bank total capitalisation grew to N1.04 trillion, and GTCO recorded N1.02 trillion in market capitalisation.

While investor sentiment suggests that the Nigerian stock market’s recent peak is not a mere flash in the pan, capital market analysts have stressed the importance of ongoing stability, security, and continued economic reforms. The historic high of the Nigerian stock market has created ripples in the global financial arena, with investors keenly observing the performance of these 15 companies.

“Dangote Cement, Airtel Africa and MTN Nigeria are the largest companies by market capitalisation on the NGX and that if these companies record one per cent gain, it will affect the direction of the stock market, “said Executive Vice Chairman, of Highcap Securities Limited, Mr. David Adonri.”

He stated that investors were in the earning season and that what investors will get from dividends is one of the factors that drove the demand for shares in the market during the third quarter. 

He noted that the stock market is defying current political uncertainties because investors are futuristic that the prospect for a yield environment is bright. 

According to him, “Optimists also see strength in the market from the perspective of corporate fundamentals which remain strong despite macroeconomic frailties and assault from misfired public policies.”

On his part, the chief operating officer, InvestData Consulting Limited, Ambrose Omorodion attributed stock price appreciation in these companies to stability and its classification, saying “investors are always after highly capitalised stocks across the world.

According to him, “These are companies where Pension Fund Administrators, foreign and high network investors are ready to take positions. These companies are defensive stocks and they control over 80 per cent value on the NGX.”

Omordion explained that, “in any market of the world there are different categories of stocks that lead to different indexes to measure their performance. These 15 stocks or companies on the NGX influence the general market performance as a result of its capitalisation. It is expected that these companies should have created more wealth for Nigerians due to their huge earnings but the shareholding structure and float has not helped in this matter.

“To reduce the influence of these 15 companies and balance the market, more new companies should be encouraged to list on the Exchange. The present market fragmentation is not the best for our market; we need to have a standardized market where we have companies from across the sectors of the economy listed so that no one firm or few firms will be domineering and dictating the movement of the market as we currently experience.”

He, however,  said, it is not too good for these few companies to keep dominating the market because it does not represent the whole economy, and some of these companies are having float problems due to their shareholding structure, saying, this shows that the market is not deep and does not represent the size of the economy.

Omordion said, government and the market regulators should encourage companies to list and participate, saying, “making the right policies to drive economic growth and encourage small businesses to list by reducing cost of listing and post listing requirements are key to addressing this issue.”