Equity Investors Gain N13trn in 2023
The Nigerian Exchange Limited (NGX) closed with over 13tn gain for investors in the equity market.
This gain nearly tripled the figure recorded in 2022, which stood at N5.619tn, after the market capitalisation closed at N27.915tn.
At the close of the year’s trading activities on Friday, investors on the local bourse had gained N13.003tn as the market capitalisation closed at N40.917tn. Similarly, the benchmark index of the exchange, the All-Share Index, had also appreciated. Its year-to-date gains stood at 45.90 per cent with the ASI at 74,773.77 points at the end of trading in 2023. This is a significant increase as the ASI had closed 2022 with YTD of 19.98 per cent.
At the end of the year closing gong ceremony, the Group Managing Director/CEO-Designate of the NGX, Temi Popoola, stated that the market had done well in 2023.
Although there had been a spree of delisting and exit of multinationals over the challenging business environment, the market also witnessed some listings such as that of Nigeria Infrastructure Debt Fund managed by Chapel Hill Denham, VFD Group and Mecure Industries.
Commenting on the outlook for 2024, the Head of Research, Parthian Securities, Oluwaseun Dosunmu, said that the economic landscape in Nigeria for the year 2024 presented a dynamic scenario with the threat of a bubble burst in the equities market.
“The recent surge in market valuations raises concerns about its sustainability, potentially leading to a rapid correction. The fate of corporate earnings is intricately linked to the volatile exchange rates, with gains or losses in this area expected to play a pivotal role in shaping the financial performance of businesses. Furthermore, the prevailing high-interest rate environment introduces an additional layer of complexity, impacting various sectors and influencing investment decisions,” he said.
Dosunmi added that Nigerian banks were poised to be significant beneficiaries of the prevailing high yields from investment securities.
“The ongoing recapitalisation efforts in the banking industry, coupled with capital raising initiatives by listed companies, underscore a strategic response to navigate the evolving economic landscape. The potential for mergers and acquisitions within the banking sector adds another dimension to the unfolding narrative, indicating a dynamic period of consolidation and reshaping of the financial industry. These structural shifts are expected to redefine the competitive landscape and influence the overall trajectory of the Nigerian financial sector.
“Moreover, a welcomed prospect emerges with the anticipation of a moderation in inflation, projected to alleviate the strain on corporate margins throughout 2024. This anticipated relief in inflationary pressures is poised to create a more favourable environment for businesses, fostering stability and resilience in the face of economic challenges. Additionally, the proposed listing of the Dangote refinery stands out as a pivotal development that is expected to bolster investors’ confidence in the Nigerian equities market. This move is likely to contribute positively to market sentiment, reflecting a strategic step towards diversification and expansion within the Nigerian industrial landscape. As stakeholders closely monitor these multifaceted factors, a nuanced and analytical approach becomes imperative to comprehend the intricate dynamics shaping Nigeria’s economic outlook in 2024,” he concluded.
