Stock Market Investors Gain ₦15.3 Trillion in Five Months Amid Economic Challenges

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Despite facing significant economic challenges, investors in Nigeria’s stock market gained a total of ₦15.25 trillion in the first five months of 2024, according to a report by the Daily Sun. This impressive gain comes amid rising inflation, increased interest rates by the Central Bank of Nigeria (CBN), and various macroeconomic uncertainties.

Data from the Nigerian Exchange Limited (NGX) shows that market capitalization, which began the year at ₦40.917 trillion, rose to ₦56.172 trillion by the end of May, marking a 37.3% increase. Similarly, the NGX All Share Index (ASI) increased by 32.8% Year-to-Date (YtD), reaching 99,300.38 basis points from 74,773.77 basis points at the end of 2023.

This 32.8% growth positions the Nigerian stock market as the best-performing exchange in Africa. The NGX management has enforced compliance, transparency, and created a market-friendly environment, encouraging heavy participation from both local and foreign investors.

Since the start of 2024, the stock market has experienced a significant rally, particularly in the industrial goods, oil & gas, and consumer sectors. The NGX Industrial Index has surged by 73.08% YtD, driven by investments in large companies such as Dangote Cement Plc, whose stock price rose by 105.28% to ₦656.70 per share. The NGX Consumer Goods Index also appreciated by 39.5%, while the NGX Oil/Gas Index gained 24.07% YtD, and the NGX Insurance Index increased by 14.17%.

Conversely, the NGX Banking Index dropped by 11.13% to 797.37 basis points due to cautious trading amid banking sector reforms.

Capital market analysts attribute the strong performance to mixed corporate earnings for the first quarter of 2024, federal government reforms in the foreign exchange market, and the removal of fuel subsidies. David Adonri, Vice President of Highcap Securities Limited, noted that investor sentiment was influenced by the election of Bola Tinubu as president, who is expected to implement economy-friendly policies.

Adonri expressed optimism that the stock market would maintain its positive momentum in the second quarter of 2024, especially with anticipated banking sector recapitalization prompting investor interest in bank rights issues.

Despite the hike in the

to 26.25%, experts believe this created a sentiment-driven trading environment as investors sought alternatives to hedge against double-digit inflation. At the recent Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso emphasized the need to achieve price stability and curb inflation, which reached 33.69% in April 2024, the highest since March 1996.

Investment banker and stockbroker Tajudeen Olayinka highlighted that investors’ drive to hedge against inflation led to increased buy interest in equities. He also pointed out that the economy is still awash with excess liquidity, largely due to ₦30 trillion printed during former President Muhammadu Buhari’s administration, which continues to chase limited profitable investment opportunities.

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