After months of bearish sentiments, equity investors on the Nigerian Exchange Limited (NGX) saw the value of their wealth growing by N5.3tr in the first six months of 2023, boosted by gains in the month of June, as the market reacted positively to audacious macroeconomic reforms made by the new administration of President Bola Tinubu in his first month in office.
Specifically, market capitalization (worth) of listed companies, which had opened the year at N27.915 trillion, closed on Friday, June 30 at N33.197 trillion.
Within the period also, the benchmark NGX All Share Index (ASI), an indicator used to measure the average performance of listed firms on NGX, hit a 15-year high for the first time since 2008, crossing the 60,000 basis points mark, to close at 60,968.27bps, compared to its opening value of 51,251.06bps it opened January 3, 2023. This represented an increase of 8,717.21bps, or 18.96%.
Reacting to the performance of the market, operators noted that the policies of the new administration under Tinubu, including the harmonization of different exchange rates and the floating of the Naira at the Investors and Exporters window, leading to the rise in the fortunes of investors.
Recall that the persistent cash crunch, soaring inflation and the uncertainties in the build-up to the 2023 elections dampened the mood of investors as they activated the “cautious attitude” to stock trading. But sentiments started improving as the cash crunch eased and impressive corporate results came in.
Commenting on the performance, the Chief Relationship Officer, Foresight Securities and Investments Limited, Charles Fakrogha, said the smooth transition of power alongside bold reforms led to the rise in market capitalization.
He also noted that the huge volumes of shares traded recently meant foreign investors might be thinking about making a comeback into the equities market.
On Friday, June 30, 2023, a total of 998.08m shares valued at N15.96bn were exchanged in 10,580 deals.
“Investors were uncertain about the elections in February and we saw that the Naira redesign implementation flopped badly. Then interest rates were continuously raised by the Central Bank of Nigeria (CBN). Inflation was actually on the minds of investors, but again we saw the smooth transition as well as bold policy statements from President Tinubu on May 29. This has led to the gains and positive sentiments the market is currently experiencing,” he said.
Fakrogha, however stressed the need for the present administration to establish a cabinet and forge ahead with its plans for the nation as this will stimulate activities in various sectors of the economy and revive the capital market.
Also reacting, Chief Executive Officer, NGX, Temi Popoola noted the readiness of the bourse to collaborate with the new administration to develop the right policies that will steer market development and drive more listings.
“We are looking to collaborate with the new administration to develop the right policies that promote listings in our market with the support of stakeholders like the Chartered Institute of Stockbrokers (CIS), Association of Securities Dealing Houses of Nigeria (ASHON), Association of Issuing Houses of Nigeria (AIHN) and other.