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Nigeria’s Stock Market Gains N1.08trn in January Amid Election Concerns

The growth in the stock market was driven by high-mid capitalised stocks such as Dangote Cement Plc, Airtel Africa Plc and MTN Nigeria Communications Plc, among others.

Despite concerns about the general election, the stock market segment of the Nigerian Exchange Limited (NGX) kicked off this year on a positive, adding N1.08 trillion in market capitalisation in January as investors positioned themselves in dividend-paying stocks.

The stock market arm of the NGX had closed positive in 2022, gaining N5.62 trillion to close the year at N27.915 trillion as high network investors, most especially Pension Fund Administrators (PFAs) positioned in listed fundamental stocks.

The market last year witnessed foreign investors’ exit due to the scarcity of foreign exchange, double-dight inflation rate and hike in the Monetary Policy Rate (MPR). All these gave room for retail/institutional investors to dominate trading.

Findings by THISDAY revealed that the market capitalisation closed trading at N28.998 trillion yesterday, an increase of N1.08 trillion from the N27.915 trillion it opened for trading this year.

Consequently, the NGX All-Share Index rose by 3.88 per cent or 1,987.61 basis points to 53,238.67 basis points from 51,251.06 basis points it closed for trading in 2022.

Sectoral performances revealed that the NGX Banking Index appreciated by 7.5 per cent to 448.85 basis points, from the 417.50 basis points it closed in 2022, while the NGX Insurance rose by 5.4 per cent to 183.71 basis points as of January 31, 2023, from the 174.36 basis points it closed last year.

Also, the NGX Consumer Goods Index closed January 31, 2023 at 622.15 basis points, up by 5.64 per cent from 588.93basis points, NGX Oil/Gas Index rose by 5.4 per cent to 487.51 basis points from 462.48 basis points it closed in 2022.

In addition, the NGX Industrial Index closed January trading at 2,454.72 basis points, up 2.144 per cent from 2,403.24 basis points the stock market opened for trading in 2022.

THISDAY findings showed that the growth in the stock market was driven by high-mid capitalised stocks such as Dangote Cement Plc, two listed telecommunication giants- Airtel Africa Plc and MTN Nigeria Communications Plc, among others.

Airtel Africa closed trading yesterday at N1,660.00 per share, a 1.5 per cent higher than N1,635.00 per share it closed in 2022, while MTN Nigeria rose by nearly five per cent to N225 per share from N215 per share it opened for trading in January.

Dangote Cement closed trading at N266.9 in January 2022, representing an increase of 2.26 per cent from N261 per share as Zenith Bank Plc moved to N25.1 per share as at January 31, 2023 from N24per share it closed for trading in 2022.

Speaking with THISDAY, the Vice President, Highcap Securities Limited, Mr. David Adnori said the anticipation for end-of-the-year dividend distribution lifted the stock market in January 2023.

 “The performance of the stock market in January is driven by shareholders’ expectation for the end of the year earnings and distribution of dividends,” he said.

Speaking on the outlook of the stock market in 2023, the Managing Director/Chief Economist at Analysts Data Service and Resources Limited,  Dr Afolabi Olowookere said: “In the last three years of election, the market had closed in the negative and so looking at it, stock market returns might likely close at -16 per cent at the end of the year and this will be centered on factors like uncertainties around the outcome of the elections, low capital inflows and rising inflation.”

Analysts at Investment One in a report titled, “2022 review and 2023 macro-economic and financial market outlook,” stated that the direction of the stock market performance would be largely determined by the trio impact of fixed income yields in tandem with monetary policy, corporate actions, and election turnouts.

“Ditto to our outlook of tepid movement in yields in the fixed income space and expectations of a less aggressive hawkish tone from the CBN, negative real returns should remain relatively high in the fixed income space giving room for alpha-seeking investors diverting more funds to equities as it remains a solid channel for positive real returns.

“For corporate earnings, we are cautiously optimistic of a positive earnings performance in 2023 given the negative impact of high inflation pressures, increased monetary policy tightening and FX instability.

“Although we expect a broad-based resilient performance, we do not see a significantly upbeat performance as the aforementioned factors remain deterrents,” the report added.

On their part, a group of analysts at Emerging Africa in a report projected that the Nigerian stock market would maintain its positive trend in the near term, backed by positive corporate financial performance and impressive dividend payout from the dividend payment stocks.

 Kayode Tokede