By John Ikani
In a major boost to the Nigerian stock market, share prices surged to their highest point yesterday, driven by a wave of optimism surrounding ongoing economic reforms and strong corporate earnings.
The All-Share Index (ASI), the key benchmark for tracking stock price trends in Nigeria, surpassed the significant 70,000-point milestone, closing at an impressive 70,581.76 points.
his marked the first time the ASI had ever reached this remarkable level.
The surge in the ASI brought the average year-to-date return for Nigerian equities to 37.7 percent, indicating that investors had accumulated capital gains of N10.52 trillion so far this year.
Yesterday’s achievement underscored the continued rally in the Nigerian stock market, following its historic breakthrough on August 29, 2023, when it set a new record at 66,490.34 points, surpassing the previous highest index point of 66,371.20 recorded on March 05, 2008.
The ASI, a widely recognized indicator of Nigeria’s equity market performance, tracks all share prices on the Nigerian Exchange (NGX). It serves as a barometer for pricing trends and investors’ returns in the nation’s stock market.
The surge in the ASI can be attributed to substantial and widespread bargain-hunting, resulting in a 1.94 percent increase from the opening value of 69,236.19 points to the closing value of 70,581.76 points. The ASI had started the year at 51,251.06 points.
The aggregate market value of all quoted equities also rose from an opening value of N38.039 trillion to close at N38.78 trillion, representing an increase of N739 billion. It had commenced the year at N27.915 trillion.
Analysts believe that the recent bullish trend can be attributed in part to investors’ positive perception of President Bola Tinubu’s pro-market administration.
The removal of the petrol subsidy and the liberalization of the foreign exchange market are among the reforms that have contributed to this upward trajectory, according to the NGX.
The NGX emphasized that this significant milestone has generated a great deal of excitement among investors and sparked discussions about Nigeria’s economic future on a global scale.
While it doesn’t guarantee prosperity, it does signal global recognition of Nigeria’s immense potential, with hopes for improved living standards and economic stability for the nation.
Data from trading revealed that while foreign investor participation fluctuated, it still exceeded previous records. On the other hand, Nigerian domestic investors displayed a stronger positive sentiment, resulting in increased allocation to equities.
Total transactions in the equity market reached N2.71 trillion by the end of the third quarter, marking a 38 percent increase compared to the same period in 2022.
Analysts celebrated the market’s performance, acknowledging that the 70,000-point milestone is a significant breakthrough.
Afrinvest Securities labelled it a “historic” achievement, though they anticipated potential profit-taking and intermittent declines.
Cordros Securities noted that the market had surpassed a “psychological mark,” emphasizing the importance of this new threshold.
SCM Capital emphasized that “buy interest persists” in the stock market, reflecting investors’ confidence and prospects for the equities market.
Nigerian equities experienced a net gain of N1.708 trillion in October 2023, driven by better-than-expected corporate results and despite concerns over macroeconomic challenges. Many companies demonstrated resilience and substantial improvements in profitability.
Month-on-month analysis revealed that the market capitalization rose by N1.708 trillion, increasing from N36.331 trillion at the beginning of the month to N38.039 trillion by October 31, 2023.
The ASI also grew by 4.30 percent, starting at 66,382.14 points in October and closing at 69,236.19 points.
David Adonri, Managing Director of Highcap Securities, pointed out that the market’s gain in October reflected impressive nine-month results, with foreign investors turning to Nigerian stocks.
The overall market performance was largely influenced by positive sentiment related to the smooth transition of power and President Bola Tinubu’s bold economic policies, including changes in security leadership and the replacement of the Central Bank of Nigeria (CBN) Governor.
Renowned investor and entrepreneur Mr. Tony Elumelu expressed confidence in Nigeria’s current economic climate, highlighting substantial opportunities for investors.
He encouraged the Indian private sector to explore these opportunities, given Nigeria’s large market, abundant prospects, and demographic advantage, with a vibrant and consumer-oriented population.
Elumelu stressed, “Nigeria is a huge market; over 200 million people with the largest economy on the continent. Most importantly, the population is not just over 200 million people; the demography of the population is exciting. We have a cohort of young people who are there to consume, and we also have people who are intelligent, energetic, hardworking, who provide the human capital that investors need to drive their businesses.”
