Nigerian stocks have concluded the year 2023 with a remarkable surge, gaining 46.6% or N13 trillion in the Lagos market. This surge signifies a substantial improvement in the market value of equities compared to the previous year.
The total value of the 155 equities at the close of trade on Friday stood at an impressive N40.9 trillion, reflecting the significant growth experienced in the market over the year.
The change of government in May brought about several market-friendly reforms that positively impacted share prices, leading to the benchmark equity index reaching its all-time high of 74,773.77 basis points by the end of the year.
However, the performance of the Nigerian currency, the naira, did not mirror the success of the stock market. The naira finished the year as the world’s worst-performing currency, following a devaluation of about 40% in June, which led to its decline in value.
Despite challenges, the Nigerian stock market has continued to see a boom in local investors’ participation. In 2021, the equities yielded as much as 50%, earning the Nigerian Exchange the title of the world’s best-performing stock exchange. Last year, despite obstacles, the equities still yielded a substantial 20% return.
Local participation in the equity market has been a driving force, accounting for 88% or N2.9 trillion of total trade as of November, compared to 83.3% or N1.8 trillion in 2022. In contrast, foreign investors contributed only 11.2% or N362.8 billion, down from 16.7% or N364 billion in 2022.
The positive sentiment in the equity market has been attributed to Nigeria’s high inflation rate, which reached an 18-year high of 28.2% in November. This prompted investors to shift from fixed-income securities to stocks as a means of protecting their investments against inflation.
Praise Ihansekhien, head of investment research at Meristem Securities in Lagos, believes that the current positive sentiment will continue into the next year. She anticipates increased corporate actions, new listings, and higher economic growth to drive further growth in the equities market.
Sector-wise, the NGX Oil & Gas index emerged as the best-performing sector, returning 125.5%. The NGX Banking Index followed closely with a 114.9% appreciation, while the NGX Consumer Goods Index yielded 90.4%. The NGX Insurance Index returned 84.6%, and the NGX Industrial Index saw a growth of 12.9%. Additionally, the NGX 30, which tracks the top 30 companies on the exchange, returned 51.4%.
The top five performing stocks were Transcorp Hotels, Chams, Computer Warehouse Group, Transcorp, and MRS Oil, with gains ranging from 645% to 1,023%.
Source: Premium Times