In a surprising turn of events, the Nigerian Exchange Limited (NGX) wrapped up January 2024 with a staggering 35.3% surge in the All-Share Index, marking an exceptional performance despite prevailing economic challenges. Investor confidence in listed corporations proved instrumental in this remarkable achievement, overcoming hurdles such as heightened inflation, a depreciating exchange rate, and persistent security concerns.
The All-Share Index closed the month at an impressive 101,154.46 index points, showcasing a significant 35.3% increase from the previous year’s conclusion. The year-to-date (YTD) return for the NGX All-Share Index mirrored this resilience, standing at an equally notable 35.3%.
Investor optimism translated into tangible shifts in purchasing behavior, propelling the All-Share Index to surpass the historic 100,000 points threshold on January 24th, 2024—an unprecedented milestone in the history of the NGX. Before achieving this feat, the NGX had already established itself as the world’s best-performing stock market in the first three weeks of 2024, reaching 94,538.12 points by January 19th.
Despite a brief downturn with significant sell-offs triggering a bearish trend on January 30th and 31st, resulting in a 3.36% decline in the All-Share Index, the overall month-end performance remained impressive.
Noteworthy is the NGX’s market capitalization, which opened the trading month at N40.917 trillion and closed at N55.357 trillion, registering a month-to-date gain of about N14.440 trillion.
Market analysts attribute this unprecedented surge to various factors, including favorable policies introduced by President Bola Tinubu’s administration, such as the removal of fuel subsidies, streamlining of exchange rates, and the floating of the naira. Investors strategically positioned themselves to take advantage of the recent record earnings posted by quoted firms.
David Adonri, Executive Vice Chairman of Hicap Securities Limited, emphasized the role of the earning season in driving demand for shares. Despite ongoing political uncertainties, the equities market demonstrated resilience, with investors focusing on the bright prospects for a yield environment.
The demographic shift in the NGX, with more local institutions and retail investors participating, has contributed to reduced volatility in stock prices. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited, highlighted that the market’s positive sentiment is driven by expectations that policies will encourage foreign investment.
Looking ahead, analysts project a bullish outlook for 2024, anticipating further improvement as more companies approach the market for listing and public offerings. Government policies around foreign exchange and subsidy removal are expected to normalize, with the equities market being driven by company performance and new pro-market policies.
The market’s resilience and the promising start to the year have fueled optimism among analysts, suggesting a positive trajectory for the Nigerian stock market in the coming months. As investors eagerly await unfolding developments, the NGX’s unprecedented performance remains a beacon of hope amid challenging economic conditions.
Credit: NairaMetrics
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