Though it was unable to beat inflation, Nigeria’s equities market closed the year 2022 with a positive return of 19.98 percent. Delayed Santa Claus rally helped push the market to a record high.
At the close of the trading session on Friday, the last trading day of 2022, the market’s benchmark performance indicators – Nigerian Exchange Limited (NGX) All-Share Index (ASI) and its market capitalisation increased from the preceding day’s low of 50,300 points and N27.39 trillion to 51,251.06 points and N27.92 trillion.
Speaking on what 2022 represents for the Nigerian capital market, Oluwole Adeosun, president and chairman of council,
Chartered Institute of Stockbrokers, said: “2022 was a glorious year for the Nigerian stock market. The primary market was boosted with the first GenCo to be listed on the NGX Main Board, Geregu Power, and this should open up the door to others in the sector to get listed.
“Apart from the numbers, the market also took some important strategic steps to move the market closer to the highest global standards and ensure a prosperous future for the market and our investors. The Nigeria Exchange Limited launched the first exchange-traded derivatives market in West Africa, with Equity Index Futures Contracts.
“We also witnessed the launch of the first Central Counterparty Services in West Africa, by way of NG Clearing which will facilitate the clearing and settlement of exchange-traded derivatives and commodities traded. Equally important is the African Exchanges Linkage Project, which has gone live on integrating African capital markets by facilitating cross-border trading and free movement of investments in the continent.”
Adeosun said that given the underlying dire macroeconomic context, the Nigerian capital market performed very well in 2022.
“If the country is able to sail through the elections storms in February, we should expect a better year for the market in 2023,” he added.
Sam Onukwue, chairman of Association of Stockbroking Houses of Nigeria, said despite global volatility, the NGX maintained its positive momentum in the nine months to September, gaining N4.15 trillion to outshine global markets that had witnessed severe volatility.
He said: “The market capitalisation of the NGX had opened in 2022 at N22.297 trillion, gaining N4.15 trillion or 18.63 percent to close at N26.451 trillion as of September 30, 2022. The Nigerian All Share Index closed the first half of 2022 with a gain of about 21.17 percent year to date, making it one of the best-performing stock markets in the world.
“However, investors in the Nigerian stock market have witnessed double-digit inflation, scarcity of foreign exchange, uncertainty in global economies, and of course, a hike in the Monetary Policy Rate (MPR) to 15.5 per cent. Investors in the stock market reacted to Central Bank of Nigeria’s hike in MPR, leading to the aggressive movement of investors to the fixed income market that comes with low-risk investment and modest yield.”
Onukwue said investors reacted sharply to three quick successions in MPR hike, beginning with 13 percent in May, 14 percent in July, and 15.5 percent in September.
“September 2022 was quite spectacular because investors exercised extreme caution by holding back further investment in equity, in reaction to the aggressive rise in inflation (20.52 percent) in the month of August 2022. This decline was due to the continued rise in fixed income rates due to the persistent hike in MPR,” he added.
On the outlook for 2023, he said: “The continued increase in interest rates will further affect the Stock market as investors will turn to higher yields investible instruments. The oil and gas industry will continue to thrive with the expected increase in international oil prices.
“The banking sector in Nigeria will continue to flourish. The growth of electronic transactions would further improve bottom lines. The FMCG industry may struggle due to persistent inflation, and the reduction in purchasing power of consumers. Foreign portfolio managers and investors will maintain a ‘wait and see’ until after the 2023 elections.”
