June 30, (THEWILL) – The Nigerian equities market recorded significant gains in the first half of the year with market capitalisation closing at N56.60 trillion on June 28 2024, and the NGX ASI: maintaining the surge it recorded within the period to close at 100,057.49 basis points.
This resulted in a market capitalisation gain of N15.68 trillion year-to-date (38.3 per cent), as the ASI also closed positive with 25,283.72 basis points gain representing a growth of 33.1 per cent year-to-date.
This achievement surpassed the N33.19 trillion market capitalisation and the NGX
ASI 60,968.27 basis points recorded in the equivalent period of the preceding year (HY 2023) representing a growth of 70.5 percent and 64.1 percent, respectively, as the local bourse sustained the rally into the new trading year.
The exceptional performance was primarily attributed to the remarkable surge in banking stocks, with major financial institutions, such as Zenith Bank, GTCO, UBA leading the charge.
Investors strategically positioned themselves to capitalise on the impressive earnings reports released by the banks awash with cash from the forex variation windfall.
Also, fortune hunters, itching for a bigger pie, had witnessed a huge exodus from the fixed income window to the equities market when the yields were less attractive as the government battled to salvage the troubled economy.
The local bourse had furthered its rally into 2024, rising by 1.63 percent on January 2, the first trading day of the New year.
The trend remained unwavering to the end of January as the NGX ASI appreciated by 3 percent to cross 100,000 index points hitting 101,571.11 points – the first time in the 23 years of existence of the Exchange.
It is on record that the NGX had earlier secured its position as the world’s best performing stock market in the first three weeks of 2024, when it capped off the trading day on January 19, 2024, at a record 94,538.12 points.
With a remarkable year-to-date return of 26.43 per cent, the NGX had outshone its global counterparts within the first quarter.
Additionally, the demand for shares in blue-chip firms such as BUA Foods, MTN and Transcorp group earlier in the year contributed to this positive market sentiment.
Financial analysts further reacted to this strong market performance by attributing it to recent corporate actions.
They anticipated that investors will continue to selectively invest in fundamentally strong stocks.
The bank recapitalisation programme will also expand the performance of the equities market as the financial services institutions invade the stock market to raise their capital base within the period prescribed by the Central Bank of Nigeria (CBN)
Concerning the spate of delistings in the NGX, market operators argued that the limited consideration of delisting actions had not shown any discernible impact on investor sentiment. Instead, the market is setting new records, and year-to-date returns are soaring.
Analysts further attribute the ongoing market rally primarily to the consolidation shots of high-net-worth individuals and the robust trading activities of institutional investors.
They argue that delisting, especially when accompanied by higher offer prices, results in minority shareholders realizing higher investment values
A stockbroker, Dr Paul Uzum, attributed the rally in the equities market to the impact of fiscal and monetary policy circumstances.
“Change in government policies and removal of fuel subsidies fueled a rally in oil and gas, while devaluation caused the banks to make huge profits from FX gains. So the market responded. There is also a huge inflow from politically exposed persons who now have the confidence to invest due to change of government,” Dr Uzum said in a note to THEWILL.
In the last week of the half-year ended June 30, a total turnover of 2.651 billion shares worth N49.976 billion in 41,610 deals was traded by investors on the floor of the Exchange, in contrast to a total of 3.301 billion shares valued at N53.157 billion that exchanged hands in the previous week in 27,536 deals.
The financial services industry (measured by volume) led the activity chart, with shares valued at N30.455 billion traded in 21,899 deals; thus contributing 69.67 per cent and 60.94 per cent to the total equity turnover volume and value respectively, the Conglomerates with 1.847 billion.
Industry followed with 272.398 million shares worth N3.546 billion in 2,165 deals. The third place was the oil and gas industry, with a turnover of 112.800 million shares worth N2.259 billion in 2,748 deals.
Trading in the top three equities namely FBN Holdings Plc, Transnational Corporation Plc,and Access Holdings Plc (measured by volume) accounted for 1.032 billion shares worth N19.799 billion in 6,083 deals, contributing 38.92 per cent and 39.62 per cent to the total equity turnover volume and value, respectively.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
