. Local stocks bullish
Nigerians are showing more confidence in domestic stocks as turnover in the stock market has risen by a quarter to more than N2.18 trillion in the past 11 months.
Amidst the decline in the global stock market and spiraling inflation, trading data at the Nigerian stock market showed improved momentum, with domestic investors buying more shares to fill up a slowdown in foreign transactions.
Trading data at the Nigerian Exchange (NGX) for the 11-month period ended November 30, 2022, showed that total turnover rose by 25 percent to N2.184 trillion in 2022 as against N1.741 trillion recorded in the corresponding period of 2021.
The improvement in market turnover was driven mainly by increased activities by domestic investors, especially institutional investors.
Total transactions by domestic investors in the past 11 months jumped by 35.6 percent from N1.34 trillion by November 2021 to N1.82 trillion by November 2022.
Retail domestic investors accounted for N607.45 billion in 2022 as against N540.38 billion in the comparable period of 2021, an increase of 12.4 percent. Retail institutional investors’ turnover rose by 51.3 percent from N801.4 billion in November 2021 to N1.21 trillion by November 2022.
Total transactions by foreign portfolio investors, however, declined from N399.2 billion by November 2021 to N364.02 billion by November 2022, thus reducing the proportion of foreign transactions to total market transactions from 22.93 percent in 2021 to 16.67 percent in 2022.
The Nigerian stock market has been a bright spot in the largely negative global stock markets. Investors in Nigerian equities rallied N2.08 trillion in net capital gains in November 2022, ranking among the best global performers for the month. The average return for November 2022 stood at 8.72 percent, the best monthly performance for the Nigerian market since May 2022.
With a year-to-date return of 12.73 percent, Nigeria closed the weekend fourth on the global returns chart of 22 leading advanced and emerging markets.
Most analysts were optimistic that Nigerian equities might post a positive return for the third consecutive year, citing recent buying trends and the traditional year-end positioning for earnings season.
The All Share Index (ASI)- the common value-based index that tracks all share prices at the Nigerian Exchange (NGX) closed the weekend at 48,154.65 points as against its 2022’s opening index of 42,716.44 points, representing an average increase of 12.73 percent.
The aggregate market value of all quoted equities has also risen from 2022’s opening value of N22.297 trillion to close weekend at N26.229 trillion, representing an increase of 17.63 percent or N3.93 trillion. The difference between the ASI and aggregate market value growth rate was due mainly to new primary listings during the year including large-cap listings by BUA Foods Plc and Geregu Power Plc.
Nigerian equities closed 2021 with an average return of 6.07 percent, equivalent to net capital gains of N1.278 trillion. The Nigerian market in the throes of the outbreak of the COVID-19 pandemic in 2020 recorded an average return of 50.03 percent, representing net capital gains of N6.483 trillion.
The ASI posted an average return of 8.72 percent in November 2022, equivalent to a net capital gain of N2.08 trillion. The Nigerian market ranked sixth on the global returns table in November 2022. The ASI closed November 2022 at 47,660.04 basis points as against the month’s opening index of 42,716.44 points. The aggregate market capitalisation of quoted equities also rose to N25.959 trillion as against the month’s opening value of N23.878 trillion.
Market analysts attributed the positive stock market performance despite rising inflation and interest rate hike by the Central Bank of Nigeria (CBN), to better-than-expected earnings results from quoted companies as investors intensified bargain-hunting for value stocks.
The Nation
