Nigeria grows 2023 equities trade by 54.3% to N3.58trn

…trails 2007 level

Investors in Nigeria’s equities market traded stocks worth N3.58trillion in year 2023, a remarkable 54.3 percent increase from N2.32trillion in 2022. The highest traded was done in July 2023 (N702.98billion), while the least trade was done in March 2023 (N146.22billion).

The record value of stocks traded in 2023 trails the year 2007 level when N4.172trillion stocks were traded, according to domestic and foreign portfolio investment report of the Nigerian Exchange Limited.

In 2007, domestic investors traded stocks worth N3.556trillion while in 2023, domestic investors traded equities worth N3.167trillion. In 2007, foreign investors traded stocks worth N616billion while in 2023, they accounted for N411billion of equities transactions.

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Out of the record N3.58trillion equities traded on the Nigerian Exchange Limited (NGX) in 2023, only N410.62billion worth of transactions were by foreign investors, representing just 11.48percent of the total while local investors traded equities worth N3.167trillion, representing 88.52percent. This is compared to N379.23billion (16.32percent) by foreign investors and N1.945trillion (83.68percent) by domestic investors in year 2022.

The Nigerian equities market closed the year 2023 with equities capitalisation at N40.917trillion and NGX All Share Index (ASI) at 74,773.77 points. The market finished 2023 with returns of 45.90 percent.

Olatunde Amolegbe, Managing Director/Chief Executive of Arthur Steven Asset Management Limited said “Most analyst went into 2023 forecasting that the market performance was going to be steady at best if not downbeat and the fundamental assumptions for the forecast is based on the historical low performance of the market during election years.

“However, 2023 threw what we would refer to as a cuff ball as the market not only outperformed all forecast it went ahead to break multiple records”.

Amolegbe, while reviewing the market performance for 2023 also presented outlook for 2024, saying “We think investors should be wary of the likely impact of inflation and interest rate on their portfolio and should inoculate the portfolio by leaning towards equities in the first half of the year while watching out for how interest rates react to likely macroeconomic realities”.

Nigeria’s stock market is now world’s best after multiple sessions of positive close helped the market to beat Argentina, a country it had trailed earlier this year 2024.

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Nigerian Exchange Limited (NGX) All Share Index (ASI) surpassed 101,000 psychological level on Wednesday as BUA Cement led other major advancers that continued to dominate market.

The market has risen year-to-date (YtD) by 35.84 percent following only one session of negative close this year.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation furthered their northward movement from Tuesday’s lows of 98,616.97 points and N53.967 trillion respectively to 101,571.11 points and N55.583trillion. The market rose by 3 percent or N1.62trillion on Wednesday.

Tactically answering questions on whether investors should sell the January rally, the Guy Czartoryski-led Lagos-based Coronation research analysts said, “The direction of the market in January over the past 15 years has been a pretty good indicator (80percent of the time) as to its direction for the full year.

“The two years, 2011 and 2018, when the market rallied in January but gave a negative return for the full year, were exceptions. In 2011 the market was depressed by news of a single non-performing loan owed by a fuel marketing company to several banks (these were the days before large telecom listings and banks accounted for a large part of the index).

“In 2018 the January rally followed a spectacular rally in 2017 (+42.3percent): the market thought that the trend would continue, but it came back down to earth,” Coronation research analysts said.

They further noted that, “Over the past fifteen years (2009-2023, inclusive) there have been nine January rallies (60percent of the time). Of these nine January rallies seven of them (78percent) went on to develop into full-year rallies.

“On only two occasions, 2011 and 2018, did the January rally give a false indication of where the market was headed for the full-year. And on only one occasion, 2017, was there a bear market in January which turned into a bull-run for the full year. On all the other occasions when there was a bear market in January there was bear market over the full year (five out of six occasions, or 83percent)”.

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In 2023, foreign inflow was N174.80billion while foreign outflow was N235.82billion. In 2022, foreign inflow was N195.76billion while foreign outflow was N183.47billion.

Domestic retail investors traded equities worth N1.120trillion while domestic institutional investors traded N2.047trillion worth of equities in 2023. In the year 2022, domestic retail investors traded stocks worth N642.73billion while their institutional counterparts accounted for stocks trade valued at N1.302trillion in 2022.