The Nigerian Exchange Limited (NGX) has showcased strong performance in the African stock market landscape over a three-month period.
Despite concerns about rising inflation, interest rate hikes, and weak macroeconomic indicators, investor confidence in Nigeria’s stock market remains robust.
According to data from African markets, which tracks the performance of exchanges across the continent, the Ghana Stock Exchange emerged as the leader with a 22.84% increase, followed closely by the NGX with a 19.33% gain.
The Malawi stock exchange secured the third position with a 15.79% increase.
NGX hits 15 year high with impressive market capitalization and ASI gains
This positive trend has driven the NGX to a 15-year high, with market capitalization increasing from N35.011 trillion at the start of August to N36.422 trillion at the end of the month, a gain of N1.41 trillion.
The All-Share Index (ASI), which measures the performance of Nigerian stocks, started August at 64,337.52 index points and closed the month at 66,548.99 points, marking a 3.44% increase.
Several factors have contributed to this bullish trend, including investor interest in stocks of varying capitalization levels across key sectors.
President Bola Tinubu’s administration has introduced favorable policies such as fuel subsidy removal, exchange rate unification, and the formation of the country’s economic cabinet and executives, further boosting market sentiment.
Market analysts from United Capital anticipate positive earnings performance by Nigerian corporations, supported by policies like the “Unification of the exchange rate” and “Advocacy for a Lower Interest rate Environment.”
They foresee a favorable market for equities in H2-2023, with the equities market offering strong incentives for both foreign and local investors, including a more affordable Naira, reduced taxation, and simplified foreign exchange repatriation.
Cordros Research, in its market review and outlook, emphasizes that the equities market’s resilience reflects heightened investor optimism driven by policy reforms, accommodative monetary policy, and robust corporate earnings.
While FX illiquidity issues may keep foreign investors on the sidelines, Cordros Research expects the market to deliver a positive return of 25.8% for the full year of 2023.