The NGX Oil & Gas Index made strongest monthly increase of an impressive 22.40percent in August. This comes on the heels of the Nigerian Exchange Limited (NGX) seeing notable fluctuations across its key sectoral indices. In the review month, NGX Banking Index rose by 6.52 percent, NGX Consumer Goods Index (+4.88 percent), NGX Insurance (+11.67 percent) while NGX Industrial Index decreased by 13.08 percent.
The Oil & Gas Index comprises 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 which showcased robust performance throughout the month.
However, NGX Industrial Goods Index experienced a decline of 13.06percent, 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 percent 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 capitalisation 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 percent month-on-month, rising from 76 kobo to N3.55 per share. Oando Plc followed with a 207.6 percent increase, from N25.00 to N76.90 per share. Julius Berger Nigeria Plc also performed well, with its stock appreciating by 75.77percent, 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.
Read also: NGX-ASI up 0.21% as stock investors buy Julius Berger, Oando, Eterna
Commenting on the market’s performance over the first eight months of 2024, David Adnori, vice president, Highcap Securities Limited 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 revitalise 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 recapitalisation and anticipated H1 2024 corporate earnings, particularly from the banks listed on the Exchange.
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 recapitalisations and increased interest from foreign portfolio investors.
Tajudeen Olayinka, Investment Banker and Stockbroker 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, he 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,” Olayinka concluded.
In the context of the recent hike in the Monetary Policy Rate (MPR) to 26.75 percent, capital market experts pointed out that this has fuelled sentiment-driven trading, as investors increasingly view the fixed-income market as an alternative investment avenue to hedge against double-digit inflation.
