Though it was unable to beat inflation, Nigeria’s equities market closed year 2022 with positive return of 19.98percent. Delayed Santa Rally helped push the market to the record high.
At the close of trading session on Friday December 30, the last trading day of the year 2022, the market’s benchmark performance indicators – Nigerian Exchange Limited (NGX) All-Share Index (ASI) and its Market Capitalisation increased from preceding day low of 50,300 points and N27.397trillion to 51,251.06 points and N27.915trillion..
Speaking on what 2022 represents for the Nigerian Capital Market, Oluwole Ololade 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 (NGX) launched the first exchange – traded derivatives (ETD) market in West Africa, with Equity Index Futures Contracts.
“We also witnessed the launch of the first Central Counterparty (CCP) Services (CCP) 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 (AELP) which has gone live on integrating African capital markets by facilitating cross-border trading and free movement of investments in the continent,” Adeosun said.
He said, “Given the underlying dire macro-economic context, the Nigerian capital market has 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”.
Sam Onukwue, Chairman, Association of Stockbroking Houses of Nigeria (ASHON) said
“Despite global volatility, The Nigerian Exchange Limited (NGX) maintained its positive momentum in the first nine months of 2022, gaining N4.15 trillion to outshine global markets that have witnessed severe volatility. The market capitalisation of the NGX had opened in 2022 at N22.297 trillion, gaining N4.15 trillion or 18.63 per cent to close at N26.451trillion as of September 30, 2022. The Nigerian All Share Index closed the first half of 2022 with a gain of about 21.17percent year to date (YTD) 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 (CBN) 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 per cent in May, 14 per cent in July, and 15.5 per cent 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 per cent) 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, Onukwue 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 price.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”.
