The Nigerian Stock Exchange (NGX) All-Share Index appreciated by 29.52% to close at 66,382.14 index points in the third quarter of 2023.
This development has pushed the market to its 15-year high on the back of strong positive sentiments.
Analysts attributed the rally to the policies of the new administration of President Bola Tinubu, the harmonization of different exchange rates, and the floating of the naira.
Despite concerns such as rising inflation, interest rate hikes, and apprehension surrounding the fallout of the 2023 general elections, investor confidence remained strong, leading to increased buying activity.
The positive sentiment among investors can be attributed to several factors, including the peaceful transition to power following the 2023 elections, favourable policies introduced by President Bola Tinubu’s new administration such as the removal of fuel subsidies, streamlining of exchange rates, and the floating of the naira.
Investors responded to the changes in Nigeria’s foreign exchange operational framework and also viewed President Bola Tinubu’s decision to suspend Central Bank Governor Godwin Emefiele, who had implemented restrictive policies affecting their profits, in a favourable light.
Available statistics to the TheWitness showed that the All-Share Index, which is the broad index that measures the performance of Nigerian stocks, opened the trading quarter at 51,251.06 index points at the beginning of trading in January 2023 and closed at 66,382.14 points at the end of the third quarter on September 30, gaining 15.131.08 basis points or 29.52%.
Further analysis revealed that activities on the Nigerian Exchange Limited (NGX) which opened the trading year at N27.915 trillion in market capitalization at the beginning of trading, closed the quarter at N36,331 trillion, hence has earned a year-to-date gain of about N8.416 trillion.
Market analysts believed the renewed sentiment in the local bourse market had also grown following a craving to increase capital gains on the back of low prices of stocks owing to an upset in the financial market arising from unstable policies and build-up to the 2023 general elections.
The NGX had during the period under review emerged as one of the best-performing exchanges in Africa during a 3-month duration.
According to African Markets, a website tracking the performance of exchanges in Africa, the Ghana Stock Exchange (+22.84%) emerged first while NGX (+19.33%) emerged second on the list, followed by the Malawi Stock Exchange (+15.79%).
The Managing Director, of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe in a chat with TheWitness said that a Demographic shift has happened in the NGX in the last few years.
He explained that the other driver might also be the fact that we are moving toward the end of the first half of the year, and this normally leads to portfolio rebalancing by fund and asset managers,
The Managing Director, of Crane Securities Limited, Mr Mike Eze said the result of the election which brought President Bola Tinubu stabilized the market.
He noted that policies that are market friendly introduced by the new president such as harmonization of the different exchange rates, the shake-up in the apex bank which trickle down to the money deposit bank, and the floating of the naira were major drivers for the rally.
Eze added that the removal of fuel subsidies further made the country attractive to foreign investors and high-net-worth local investors.
He noted that many investors are rebalancing their portfolios in readiness for half-year results that will hit the market any moment from now.
On market outlook in Q4, the chief research officer of InvestData Consulting Limited, Ambrose Omordion urged the new government to pursue transformation reforms and policies vigorously to sustain performance.
Cowry Assets in its Weekly Financial Markets Review & Outlook anticipated the bearish sentiment to continue in the coming week as the market seeks catalysts and policy pronouncements to trigger the bullish sentiment.
