Equities market appreciates by N4.9trn in H1 2023

Succour may have come the way of investors who endured long periods of a downturn on the Nigerian Exchange Limited (NGX) as bold economic reforms of the new government have lifted equities market capitalisation by N4.9 trillion in the first half (H1) of the year.

This comes despite rising insecurity, inflation, other macroeconomic challenges and global uncertainty. Experts said a functional and strong national economic team is required to sustain the gain.

Since the beginning of the year, the equities market has witnessed an unprecedented rally and buying interest, especially in the financial services, consumer and industrial goods sub-sector, which has continued to trigger massive bargain hunting in large company shares.

This has pushed the key performance indices and stimulated activities in the market, a development that has led to the rating of the stock market as the best-performing in Africa and third in the world.

The NGX’s all-share index (ASI), an indicator used to measure the performance of listed firms on NGX, has hit a 17-year high for the first time since 2008, to close at 60,108.86 basis points on Tuesday.

It opened the year at 51,251.06 basis points on January 3, implying an increase of 8,857.8 basis points or 15 per cent.

Similarly, market capitalisation of listed equities, which opened the year at N27,915 trillion, closed on Tuesday, June 27 at N32,729 trillion representing N4.9 trillion or 15 per cent appreciation.

Vice President of Highcap Securities, David Adonri, said the monumental gain was driven majorly by sentiment arising from the smooth handover and Tinubu’s bold economic policy changes.

“His prompt change of security chiefs also boosted investors’ confidence. The removal of Godwin Emefiele as CBN governor was another icing on the cake which impressed investors. All these added to the usual end-of-quarter rally to propel the equities market.

“Since the huge gain was propelled by investor sentiment, interest in equities in H2, 2023 can only be sustained if the policy changes translate into growth in corporate fundamentals and a fall in interest rate, otherwise, we might see a market correction that may purge equities off the sentiment that inflated it in H1, 2023,” he said.

It would be recalled that the global equities market during the fourth quarter, of 2022 was dominated by increased economic unrest, ranging from geopolitical events and the war in Ukraine, soaring inflation and increased interest rates, as well as market volatility, and fears of a recession.

There was sufficient turmoil to cause investor anxiety.