NGX Oil & Gas Index Outpaced Others with 22.39% Growth in August

Kayode Tokede

Despite notable fluctuations across the Nigerian Exchange Limited (NGX) sector indicators in August 2024, the NGX Oil & Gas Index bulked the trend with an impressive 22.39 per cent gain.

This index, which includes eight prominent Oil and Gas Marketing companies; Conoil Plc, Eterna Plc, Japaul Gold and Ventures Plc, MRS Oil Nigeria Plc, Oando Plc, Seplat Energy Plc, Total Nigeria Plc, and Capital Oil Plc showcased robust performance throughout the month.

In addition, NGX Insurance Index recorded a monthly gain of 11.46 per cent, while the NGX Banking Index rose by 6.96 per cent month-on-month. NGX Consumer Goods Index also posted a 4.30 per cent increase in August.

However, NGX Industrial Goods Index experienced a decline of 13.06 per cent, driven primarily by the underperformance of Dangote Cement, a major player in the sector. This poor performance of Dangote Cement had a considerable impact on the broader market index.

Amidst these sectoral gains, the overall Nigerian stock market exhibited volatility. The All-Share Index (ASI) dipped by 1.22 per cent to close at 96,579.54 basis points on August 30, 2024, down from 97,774.22 points at the start of the year. Market capitalization also saw a decline, shedding N36 billion to close the period at N55.478 trillion from N55.514 trillion at the beginning of August.

Despite the overall market decline, certain stocks showed remarkable gains. RT Briscoe Nigeria Plc surged by 367.10% month-on-month, rising from 76 kobo to N3.55 per share. Oando Plc followed with a 207.6 per cent increase, from N25.00 to N76.90 per share. Julius Berger Nigeria Plc also performed well, with its stock appreciating by 75.77 per cent, from N97 to N170.50 per share. These gains underscore the selective nature of market performance, where specific stocks outperformed even in a generally declining environment.

Capital market analysts observed that investor sentiment in the local market has been driven by profit-taking, but they emphasised that Nigeria’s capital market remains one of the top-performing exchanges in Africa and globally. They highlighted that while market sentiment has been cautious due to the high-interest-rate environment, the overall outlook remains positive. Key drivers of this optimism include ongoing banking sector recapitalizations and increased interest from foreign portfolio investors.

Commenting on the market’s performance over the first eight months of 2024, Vice President of Highcap Securities Limited, Mr. David Adnori, noted that investor trading has been largely sentiment driven. He added that the emergence of President Bola Tinubu has further energized the stock market, as participants are optimistic about his ability to revitalize the economy and implement business-friendly policies. Adnori expressed confidence that the market might sustain its positive momentum in the second half of 2024, bolstered by the ongoing banking sector recapitalization and anticipated H1 2024 corporate earnings, particularly from the banks listed on the Exchange.

In the context of the recent hike in the Monetary Policy Rate (MPR) to 26.75 per cent, capital market experts pointed out that this has fueled sentiment-driven trading, as investors increasingly view the fixed-income market as an alternative investment avenue to hedge against double-digit inflation.

Investment Banker and Stockbroker, Mr. Tajudeen Olayinka, also commented on the market, noting the N14.56 trillion market capitalization gain over the first eight months of 2024. He attributed this growth to the significant liquid funds available to institutional investors who currently dominate market activities. He emphasized that the future appears promising for many listed companies, which has led investors to position their portfolios for long-term gains. This resilience in the market persists despite the challenging high-interest-rate environment.

Looking ahead to the second half of 2024, Olayinka projected a more balanced market, with less rapid price movement. He explained that this is likely due to the series of offers from banks raising fresh capital to meet new capital requirements. Investors are expected to exercise their rights to additional shares or take on new shares to maintain portfolio balance. “H2 2024 will be an interesting period for the market,” he concluded.