The Nigerian inventory market wrapped up yesterday with a 37.65 % return for the 12 months, inserting it among the many three highest returns worldwide.

The efficiency of the Nigerian market in 2024 was boosted by substantial enhance in overseas portfolio investments (FPIs) and sustained demand from native traders. Overseas capital influx had risen steadily from a low of about 4 per cent in mid-2023 to a mean of about 16 per cent.

Common returns on the Nigerian market surpassed return in superior markets by greater than 15 share factors and greater than quadrupled common returns throughout frontier and rising markets. Superior markets of Americas and Europe recorded common return of some 21 per cent whereas frontier and rising markets posted common achieve of about six per cent and eight per cent respectively.

The 12-month return of 37.65 per cent implied that traders in Nigerian equities netted capital positive factors of N15.41 trillion in the course of the 12 months. The inventory market efficiency underlined equities as hedging securities, with inflation price at 34.60 per cent and benchmark rate of interest at 27.50 per cent.

The All Share Index (ASI)- the value-based widespread index that tracks all share costs on the Nigerian Trade (NGX), closed yesterday at 102,926.40 factors as in opposition to its 12 months’s opening index of 74,773.77 factors, a rise of 37.65 per cent or N15.41 trillion.

Mixture market worth of all quoted equities on the NGX additionally rose from the 12 months’s opening worth of N40.918 trillion to shut at N62.763 trillion, a rise of N21.85 trillion or 53.39 per cent.

The distinction between the ASI’s return and market worth was attributable to unadjusted values from further listings. The ASI is usually considered the benchmark return for the inventory market. It doubles as Nigeria’s sovereign index within the world markets.

Group Managing Director, Nigerian Trade Group (NGX Group) Plc, Mr. Temi Popoola mentioned the Nigerian market has proven resilience and spectacular progress trajectory.

In keeping with him, the Nigerian capital market has confirmed itself as a hub of resilience and innovation, constantly providing invaluable alternatives for traders.

“The robust efficiency of our blue-chip firms over the previous decade has been a key driver of returns, even amid difficult financial cycles. Inflationary pressures have made equities a gorgeous hedge, and strategic new listings have considerably boosted market exercise,” Popoola mentioned.

He highlighted the transformative influence of coverage reforms noting that macroeconomic shifts, significantly within the oil and gasoline sectors and forex devaluation, have been transformative.

“These adjustments, coupled with the liberalization of trade charges, have enhanced operational effectivity and contributed to the strong efficiency of listed firms. As we strategy 2025, we stay optimistic that continued reforms and a secure macroeconomic atmosphere will maintain progress, enhance liquidity, improve investor confidence, and ship long-term worth for all market members,” Popoola mentioned.

On the closing gong ceremony marking the top of 2024 buying and selling actions, NGX’s Chief Government Officer, Mr. Jude Chiemeka, represented by the Head of Buying and selling and Merchandise, Mr. Abimbola Babalola, counseled key stakeholders, together with the stockbroking group represented by the Chartered Institute of Stockbrokers (CIS) and the Affiliation of Securities Dealing Homes of Nigeria (ASHON).

Stated he: “The 12 months 2024 witnessed important exercise within the secondary market, a testomony to the efforts of our buying and selling license holders. Complementary macroeconomic fundamentals have been instrumental, and we recognize the impactful policymaking by the CBN and the Federal Ministry of Finance. We additionally commend the Securities and Trade Fee for its efficient oversight, particularly in the course of the clean banking recapitalization course of”.

CIS President, Mr. Oluropo Dada, and ASHON Chairman, Mr. Sam Onukwue, represented by the 2nd Vice Chairman, Mrs. Ify Rita Ejezie, emphasised the pivotal position of stockbrokers in driving capital market progress. They reiterated their dedication to advocating for insurance policies that improve market growth.

Excessive-profile listings had energized buying and selling actions on the trade, offering traders with a broader vary of blue-chip shares. Notable entries embrace Geregu Energy Plc, Transcorp Energy Plc, Aradel Holdings, and BUA Meals. These listings have propelled the market capitalization from N12.79 trillion on the finish of 2019 to N62.76 trillion as of December 2024, representing a meteoric enhance of N49.97 trillion.

The 2024 efficiency marked the fifth consecutive 12 months of constructive return for the Nigerian market. It had closed 2023 as one of many three best-performing markets globally. Common return for Nigerian equities in 2023 stood at 45.90 per cent, equal to web capital positive factors of N12.81 trillion.

The market had damaged its well-known earlier cycle of decline in pre-election 12 months to file its third consecutive constructive efficiency in 2022, with full-year common return of 19.98 per cent, equal to web capital achieve of N4.455 trillion.

It had closed 2021 with common return of 6.07 per cent, equal to web capital positive factors of N1.278 trillion. Within the throes of the outbreak of COVID-19 pandemic in 2020, it had recorded common return of fifty.03 per cent, representing web capital positive factors of N6.483 trillion.

ASI closed 2023 at 74,773.77 factors as in opposition to its opening index of 51,251.06 factors for the 12 months. It had opened 2022 at 42,716.44 factors.

Mixture market worth of all quoted equities had additionally risen from 2023’s opening worth of N27.915 trillion to shut the 12 months at N40.918 trillion. It had recorded N22.297 trillion as opening worth for 2022.

Managing Director, Arthur Steven Asset Administration, Mr. Olatunde Amolegbe, who defined the pricing dynamics on the inventory market, had famous that the market efficiency may solely be interpreted that traders have been reacting to the constructive outlook for the financial system.

“Firstly, the inventory market is a forward-pricing market, which means that it tends to regulate for penalties of coverage forward of their influence being felt on the bottom. So, whereas the populace is feeling the rapid damaging influence of assorted insurance policies, the market is betting that the top results of those self same insurance policies will likely be constructive for the financial system within the medium to future, which is why we’re seeing the bullish sentiments we have now witnessed to date. We should additionally recognise that the market has the capability to appropriate sharply if this doesn’t turn into the case.

“Secondly, we should additionally recognise that growing inflation price and the upcoming banking recapitalisation programme are empirically constructive when it comes to accretion to the inventory market even when the principle road could understand them as damaging within the meantime,” Amolegbe, a former president of Chartered Institute of Stockbrokers (CIS) mentioned.

Greater than a double in overseas transactions and sustained upbeat by home traders had pushed whole transactions on the Nigerian inventory market to its highest degree by the third quarter 2024.

Official buying and selling report reviewed confirmed that whole transactions on the inventory market had risen to N3.97 trillion within the first 9 months of this 12 months, the best third quarter turnover in response to obtainable official data of the market.

The 2024 efficiency represented a brand new file in opposition to the market’s turnover in third quarter 2023, when the market had set a excessive of N2.71 trillion. The closest data have been in 2018 and 2014 when the market recorded N2.01 trillion and N2.04 trillion respectively.

The most recent report additionally confirmed nearly a double within the participation of overseas portfolio traders (FPIs) within the Nigerian market, a scenario that analysts attributed to the attractiveness of the Nigerian shares and the relative liquidity occasioned by overseas trade (foreign exchange) reforms.

The proportion of participation by FPIs elevated from 9.51 per cent in third quarter 2023 to 17.56 per cent in third quarter 2024, the best previously three years.

Whole overseas transactions on the NGX grew by 170.1 per cent from N258.02 billion in third quarter 2023 to N696.88 billion in third quarter 2024, the best in six years.

Whereas foreign exchange differential contributed to FPIs turnover, home traders have additionally proven sustained robust urge for food for quoted equities with a turnover of N3.27 trillion in third quarter 2024, larger than whole transactions in earlier years of the market. Whole home transactions had stood at N2.45 trillion in third quarter 2023.

Nevertheless, the growing participation of overseas traders has diminished the proportion of home traders participation from 90.49 per cent in third quarter 2023 to 82.44 per cent in third quarter 2024.

Consultants attributed the upbeat on the inventory market to the growing attractiveness of the Nigerian market to overseas traders, ongoing financial reforms, resilient earnings by Nigerian firms, trade price differential, ongoing banking recapitalisation and the reform within the oil sector.

Managing Director, AIICO Capital, Dr Femi Ademola, mentioned Nigerian equities have turn out to be very enticing to each overseas and home traders.

“The equities market has turn out to be very enticing, largely because of the devaluation of the forex which make the shares very low-cost, particularly to overseas traders. The very robust half-year efficiency reported by corporates particularly banks and the company actions that adopted the bulletins have additionally pushed many traders to the equities market. Lastly, the shortage of volatilities within the bond market makes it unattractive to traders, thus they flock to the equities market,” Ademola, a Chartered Monetary Analyst (CFA), mentioned.

“We’ve seen growing return of overseas portfolio traders, I perceive the turnover by FPIs has grown considerably in the previous couple of months. This may be attributed to the weaker naira that makes Nigerian shares a cut price for FPIs. Secondly, new listings similar to Aradel additionally boosted traders’ urge for food for shares. This may also be seen within the mild of the approval of the Exxon Mobil’s acquisition by Seplat by the Federal Authorities. Thirdly, the banking recapitalisation train together with spectacular second quarter stories have continued to draw investments in the direction of that sector,” Amolegbe mentioned.

SOURCE: The Nation