Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Opinions Blurb

5 Nigerian companies with a combined market value of 5% of Nigeria’s GDP 

Research Team by Research Team
October 13, 2019
in Blurb, Spotlight
MTN Nigeria list on Nigerian Stock Exchange, MTN Nigeria listing
Share on FacebookShare on TwitterShare on Linkedin

The 166 stocks listed on the Nigerian Stock Market had a market capitalization of about N12.9 trillion as at the end of September 2019. Market capitalization is basically the combined value of all stocks listed on the exchange at any period. 
 

Stock markets the world over consider market capitalization as an indication of how well funded and valuable the economy is, at least from the point of view of companies who employ the majority of their citizens and contribute immensely to tax revenues and dividend payment to shareholders. Thus, it is not surprising that most analysts like to relate their stock market size to the size of the economy (GDP).  

Take, for example, the United Kingdom, which is just 6 hours away from Nigeria by air. The country Kingdom has a market cap to GDP of over 100%. The United States likewise has over 130% as its market cap to GDP. Nigeria’s African neighbours, South Africa reports an even higher market cap to GDP ratio of about 260%. World Bank data places market cap to GDP ratio at over 90%. 

RelatedPosts

Nigerian equities market closes week negative, ASI drops by 0.31%

Bears grip Nigerian equities market as ASI dips 0.12% during the week

World-famous investor, Warren Buffet once remarked that whenever the ratio of market cap to GDP is over 100% it could indicate that the stock market is overvalued signaling a possible market downturn. Thus, investors track this metric religiously.  

Nigeria’s market cap to GDP: Using the market capitalization of N12.9 trillion as of September 2019 and nominal value GDP of N129 trillion as of December 2018, Nigeria has a market cap to GDP percentage of 10%. Nigeria’s market capitalization to GDP is one of the lowest in the world.  

News continues after this ad


In fact, about 6 Nigerian companies listed post about 6.5% of GDP indicative of the relatively low valuation of most of the stocks listed on the exchange.  The companies are as follows; 

Companies  Market Cap 
MTN           2,656  
Dangote Cement           2,582  
Airtel           1,158  
Nestle           1,106  
GT Bank              859  
Combined           8,360 

 

News continues after this ad


What this means: A low market cap to GDP implies several issues that you should expect should be a major concern to investors and managers of the economy. Here are some examples; 

  • It suggests that Nigeria is basically dominated by smaller informal businesses. Data from the NBS buttresses this view as over 45% of the GDP is made up of the informal segment of the economy. 
  • Most large companies won’t list on the exchange for several reasons. MTN which just listed was coerced to list after its several skirmishes with the Nigerian Government. 
  • Startups and small businesses don’t consider the Nigerian Stock Exchange as a plausible exit for early investors. Since the banking consolidation of 2005/6 which saw many privately-owned Nigerian Banks list, we have not seen a repeat. 
  • There is also a considerable lack of interest in the stock market by retail investors. Nigerian stock market is largely patronized by institutional investors. However, retail investors typically provided huge source of capital and liquidity for the exchange.  
  • It also indicates that the stock market is not reliable for raising capital. As such, companies that need capital will rather list on foreign exchanges than in Nigeria.  
  • Another potential impact is that with a shallow stock market there are fewer investment options for Nigerians to invest their money.  

 

 

Related

Tags: NSEStock Market to GDP

Comments 2

  1. austine says:
    October 13, 2019 at 10:47 am

    wow! quite informative

    Reply
  2. Anodebenze says:
    October 14, 2019 at 3:32 pm

    what bloody nonsense,if you look at stats,nigerian stock market have declined in the 10yrs in volume,now whAT metholody ARE YOU APPLING HERE ? ON WHAT BASIS ARE YOU USING THIS DATA AND METHOLODY ?ON STOCK LIST ON IS ABOUT 178 COYS,AND THE MAJORITY OF THIS LIST COY CAME FROM THE BANK AS THE CBN FORCED THE HANDS OF THOSE BANKS TO MERGE.NOW IF YOU LOK AT THOSE stock,you’re talking about u.s stock market or the british stock market,you find,they have a higher and developed financial market and literacy,and they have have more than 1000 listed stock market in any other countries,maybe japan as they have a higher developed financial market,more than Germany or france even india.
    Maybe the nse will do more marketing and drive for more listed coy,and it can be done if they willed,wait a mins bismark rewane,who is a member of economic team,and his coy is called derivation,he may intervene as he have the eyes of Mr buhari,sorry I means eyes.they can relax some rules and simplfies the condition of getting more companies being listed.THEY CAN GET MORE LISTED COYS OF MORE THAN 50,000 WITHIN ONE YEAR,NOTHING IS IMPOSSIBLE

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

inq
avatrade
Stanbic bank
Mega Millions
UBN
Hot forex
Access Bank
Bankers Committee
First bank






    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • FG asks Google to remove Maxi Credit, Here4U, ChaCha, SoftPay loan apps from Play Store
    • How Nigerian crypto industry is handling the current bear market
    • Over 105K crypto investors liquidated as Bitcoin drops to $22K

    Follow us on social media:

    Recent News

    Babatunde Irukera

    FG asks Google to remove Maxi Credit, Here4U, ChaCha, SoftPay loan apps from Play Store

    August 19, 2022
    Crypto world

    How Nigerian crypto industry is handling the current bear market

    August 19, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Financial Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Metrics
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • Business News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com