As 2023 draws to a close, stock investors are among the biggest gainers from the reforms implemented by the President Bola Tinubu administration with the market value rising by over N11.6 trillion.
The Nigerian equities market has outperformed African peers in South Africa, Kenya and Morocco, buoyed by reforms such as the removal of petrol subsidy and the liberalisation of the foreign exchange market.
This month, the Santa Claus rally came earlier to the market, pushing stock returns higher amid pockets of profit taking.
The 41.27 percent market return year-to-date (YTD) is driven majorly by investors who have been buying oil and gas, banking, consumer goods, and insurance stocks. This, coupled with new listings this year on the Nigerian Exchange Limited (NGX), has pushed the market higher by N11.69 trillion in 2023.
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In South Africa, the Johannesburg Stock Exchange FTSE/JSE All Share Index has risen this year by 5.44 percent YtD. In Kenya, Nairobi Securities Exchange is negative 28.07 percent this year. The Moroccan market has risen by 9.74 percent.
The equities market opened this year with its All Share Index (ASI) and equities capitalisation at 51,251.06 points and N27.915 trillion respectively, but rose to 72,389.23 points and N39.613 trillion as of December 15.
The listing of the Nigeria Infrastructure Debt Fund (NIDF), VFD Group and Mecure Industries has contributed N151 billion to the equity market capitalisation this year. Exchange Traded Funds market recorded significant growth in turnover by 343.5 percent from N191.58 million to N849.71 million as of November 2023.
“Keeping in view that two key factors which have kept the development of the real sector suppressed (elevated interest rate and foreign exchange losses), we expect the new policies of the new administration, particularly the unification of the exchange rate, and advocacy for a lower interest rate environment to stand as a significant upside for the earnings performance of listed Nigerian corporates, which will bolster investors’ confidence toward listed corporates, particularly in earning seasons,” United Capital research analysts said in their outlook for this second half of the year.
For the fixed-income market, they said the new administration’s objective to dampen the interest rates environment would continue to provide enough incentive for the Central Bank of Nigeria to leave the financial system mostly liquid, in a bid to stimulate activities in the real sector.
The NGX signed memoranda of understanding with Pan-African Payment and Settlement System to enhance cross-border trading and the subsequent first transaction recorded under the platform. This is in addition to the launch of the USSD Code *5474#, which brings the market closer to retail investors.
Users of this code can now access capital market data and initiate the trading process from their mobile phones. The year also saw Non-Deal Roadshow held in the United States and the United Kingdom to attract foreign portfolio/direct investment into the Nigerian capital market and economy.
Lamido Yuguda, director general of the Securities and Exchange Commission (SEC) at the Capital Market Committee meeting held last month noted concerns around the recent reclassifications of Nigerian securities indices by FTSE-Russell and MSCI, attributing these to the present foreign exchange liquidity challenges, and its effects on investor confidence.
“In spite of lower foreign portfolio investment inflows, the Nigerian stock market had reached a positive milestone with the All-Share Index reaching an all-time high,” he added. The NGX ASI has crossed the 72,000-point mark.
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As at October, the market saw equities trading worth N2.933 trillion, with foreign investors accounting for N291.38 billion or 9.93 percent while domestic investors had N2.642 trillion or 90.07 percent. From January to October, foreign inflow into stocks stood at N122.55 billion while foreign outflow was N168.83 billion. Domestic retail investors accounted for N935.78 billion while domestic institutional investors were responsible for stock transactions worth N1.706 trillion.
The Central Securities Clearing System reported a 23 percent growth in the average daily clearing and settlement value to around N10.7 billion in the third quarter of 2023, but it dropped to N5.3 billion in October. On a year-on-year basis, as at October, there was a 60 percent growth, driven by bullish sentiments and solid performance of key equities in their half-year results.
Guinea Insurance Plc did private placement worth N9.1 billion. VFD Group Plc listed its shares worth N46.53 billion by introduction. Also, Chapel Hill Denham NIDF worth N92.53 billion was listed by introduction. MTN Nigeria Communication Plc listed its shares worth N12.82 billion from Scrip Dividends scheme.
Fidelity Bank Plc did a private placement valued at N13.97 billion. Sterling Financial Holdings Company Plc scheme of arrangement (from Sterling Bank) was valued at N46.06 billion. FTN Cocoa Processors Plc listed shares worth N850 million from convertible debt, while Neimeth International Pharmaceuticals Plc did a rights issue of N3.68 billion.
As of November 30, about N1.785 trillion worth of Nigerian equities were traded by only 10 stockbroking firms led by Cardinalstone Securities Limited, Stanbic IBTC Stockbrokers Limited, and APT Securities & Funds.
Cardinalstone Securities Limited led the league after trading stocks worth N415.083 billion, representing 12.77 percent of the total value of equities traded in the same period.
Stanbic IBTC Stockbrokers Limited accounted for N259.003 billion or 7.97 percent, while APT Securities and Funds traded stocks worth N235.119 billion, representing 7.24 percent of total value traded on the NGX in 11 months.
Other stockbroking firms that made the top 10 league are Meristem Stockbrokers Limited, Hermes Nigeria Limited, United Capital Securities Limited, FBN Quest Securities Limited, Cordros Securities Limited, Apel Asset Limited, and Morgan Capital Securities Limited.
The record value of transactions by these stockbroking firms represents 54.95 percent of the value of stocks traded on the NGX as of November.
Further look at the broker performance report shows Meristem Stockbrokers Limited accounted for equities transactions worth N160.018 billion or 4.92 percent of the total transactions on the Exchange in 11 months.
EFG Hermes Nigeria Limited had N152.557 billion or 4.70 percent; United Capital Securities Limited, N151.583 billion or 4.67 percent; FBN Quest Securities Limited, N129.143 billion or 3.97 percent; and Cordros Securities Limited, N117.985 billion or 3.63 percent.
Apel Asset Limited traded stocks valued at N86.287 billion in the same period, representing 2.66 percent of the total value of equities traded on the Exchange, while Morgan Capital Securities Limited recorded N78.546 billion worth of equities trade, representing 2.42 percent.
As at trading week to December 15, oil and gas stocks that have helped push the market higher this year are: MRS (644.7 percent), Japaul Gold (467.9 percent), Conoil (216.6percent), Oando (166.6percent), Seplat Energy (110 percent), Total Energies (99.5 percent) and Eterna (72.6 percent).
In the banking sector, investors have this year shown remarkable interests in shares like UBA (217.8 percent), Sterling Bank (198.6percent), Access Corporation (161.2 percent), Fidelity Bank (117.2 percent), FBN Holdings (112.8 percent), and ETI (114.2 percent).
Also looking at consumer goods sector performance, Northern Nigeria Flour Mills has risen this year by 530.1 percent, NASCON, 386.5 percent); BUA Foods, 206 percent; Dangote Sugar, 258.3 percent; and PZ, 129.1 percent.
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Transcorp is up 515.9 percent this year, CWG, 593.1 percent; Chams, 745.5 percent; Transcorp Hotel, 650.4 percent; Skyway Aviation, 407 percent; NAHCO, 290.6 percent; Ikeja Hotel, 352.4 percent. Sunu Assurance has risen by 300 percent, Lasaco, 118.4 percent; and Axa Mansard, 122.5percent. FTN Cocoa (403.4 percent) and Berger Paints (122.5 percent) are among other stocks that have outperformed the market.
The OTC Securities Exchange had seen positive performance as well with the NASD Securities Index increasing by 17.1 percent YTD to reach 831.09 points by the end of October 2023.
The market cap rose by 20.81 percent YTD, driven in part by the admission of new securities. In a year-on-year comparison, there was a significant 40.67 percent increase in the number of deals, and trading activities saw increases of 16.62 percent and 29.58 percent in volume and value, respectively.
Likewise, the FMDQ Exchange told the CMC members that on September 12, 2023, FMDQ Group Plc introduced the recently launched 10-year National Housing Strategy Blueprint to the Federal Ministry of Housing and Urban Development. All stages of the FMDQ Derivatives Market Development Project had been successfully executed, and regulatory approvals had been secured for additional FMDQ Exchange-Traded Derivatives products.
