In an extension of their impressive performance in recent years, Nigerian stocks closed 2023 in Lagos on Friday, gaining 46.6 per cent or N13 trillion.

This means that the market value of equities improved by almost half when set beside that of last year.

On Friday, the total value of the 155 equities at the end of trade was N40.9 trillion.

A change of government in May had sparked a couple of market-friendly reforms that boosted share prices and drove the benchmark equity index to its all-time high of 74.773.77 basis points at year-end.

But the case is different for the naira which finished the year as the world’s worst-performing currency after the Argentine peso and the Lebanese pound among the 151 currencies tracked by Bloomberg.

The value of the currency of Africa’s largest economy is little better than a dross after a devaluation of about 40 per cent in June and the free fall that followed left it battered.

Stocks are seeing a boom among local investors in Nigeria, where equities yielded as much as 50 per cent in 2021, bucking pandemic lockdowns to earn Nigerian Exchange the honour of the world’s best-performing stock exchange that year. Last year, the equities yielded 20 per cent despite challenges.

As in recent years, local participation in the equity market drove activity this year, accounting for 88 per cent or 2.9 trillion of total trade as of November, according to the NGX Foreign Portfolio Investment Report.

That compares with 2022 when local investors’ cash accounted for 83.3 per cent or N1.8 trillion of the entire trade.

Foreign investors only contributed 11.2 per cent or N362.8 billion, lower than the 16.7 per cent of N364 billion of 2022.

The decline mirrors the dilemma of attracting international investors to Nigerian stocks, in which investors from abroad are reluctant to invest because a prolonged foreign exchange scarcity in Nigeria could make it difficult for them to repatriate their proceeds when the time comes.

Altogether, N3.2 trillion went into stock trading as of November, compared to N2.2 trillion a year earlier, representing a 45.5 per cent jump.

One big factor that swelled interest in equity was Nigeria’s sticky inflation, which hit an 18-year high in November, touching 28.2 per cent. That caused many investors to dump fixed-income securities for stocks as their real yields turned negative in the face of elevated price levels.

“The year started on a good note in the first place. Of course, we saw that rally that happened after the announcement of fuel subsidy removal and reactions to company results for nine months were also things that spurred the market,” Praise Ihansekhien, who heads investment research at Lagos-based Meristem Securities, told our correspondent.

“Some companies also did some corporate actions. We had companies announcing merger like Dangote Sugar and NASCON. I will say it was a mixture of both macroeconomic factors and corporate actions.”

Ihansekhien believes the current positive sentiment will persist to an extent in the year ahead and expects increased corporate actions, new listings and a higher economic growth rate to drive equities.

Performance by sector

NGX Oil & Gas

NGX Oil & Gas, the index that tracks the most capitalised and liquid stocks in the energy sector finished the year as the best-performing sector. The index returned 125.5 per cent.

NGX Banking

The NGX Banking Index came next in the pecking order of performance, appreciating by 114.9 per cent.

NGX Consumer Goods

The NGX Consumer Goods Index, the index tracking the most capitalised and liquid stocks in the consumer goods industry, yielded 90.4 per cent.

NGX Insurance

The NGX Insurance Index returned 84.6 per cent.

NGX Industrial

The NGX Industrial Index took the rear of the five sector indexes tracked by the bourse. It yielded 12.9 per cent.

NGX 30

NGX 30, which tracks the top 30 companies on the exchange in terms of market value and liquidity, returned 51.4 per cent.

Top 5 performing stocks

STOCK GAIN

1. Transcorp Hotels 1,023 per cent

2. Chams 795 per cent

3. Computer Warehouse Group 722 per cent

4. Transcorp 666 per cent

5. MRS Oil 645 per cent

 

PT