The Nigerian Exchange Group’s All Share Index is currently trading at 48,223.86 basis points. Interestingly, the Nigerian exchange has not traded at this level since September 2008, that’s over 13 years ago.
The Nigerian stock exchange has seen significant growth, especially in 2020, when it recorded over 50% growth in ASI. In 2021, the exchange ended the year marginally bullish by 5.89%, despite strong appeal for U.S. dominated stocks. However, its performance in 2021 is relatively small, compared to the parabolic performance in 2020.
So far, in 2022, the ASI Year-to-Date (YtD) performance is bullish by 12.89%, with the Nigerian market being one of the top-performing emerging markets in Africa. This is because in YtD performance, the NGX is doing better than its peers like the Ghana Exchange which is down 3.32% YtD, the Johannesburg Stock Exchange which is down 1.1% YtD and Nairobi Securities Exchange, which is also down 6.4% YtD.
What you should know
- Since the market crash of 2008, when the Nigerian stock market traded at an ASI peek of over 66,000 basis point, the market has not fully recorded from that crash.
- However, in recent years, we are seeing a peek in the performance of the market since the market crash of 2020 caused by panic-selling induced by the COVID-19 pandemic.
- In April 2020, exactly 2 years ago, the ASI declined to as low as 20,651.59 basis points and since this point, the ASI has now more than doubled its performance compared to the current price now by 133.51%.
- Although the market has not fully recovered from the market crash, the growth potential of the market is almost guaranteed, especially with the launch of its derivatives market.
- Last week, the NGX announced the launch of Traded Derivatives (ETD) Market with Equity Index Futures Contracts. This is the first of its kind in West Africa.
- The launch of NGX ETD Market saw the listing of two Equity Index Futures Contracts, NGX 30 Index Futures and NGX Pension Index Futures. According to the press release, it is expected that more securities will be added in the future.
- The growth of the NGX is also as a result of the listing of prominent companies on the exchange. The likes of MTN, Airtel Africa, BUA Cement and BUA Foods, who have all gone on to become trillion-naira companies, have contributed greatly to the growth of the market.
- The market has also seen astronomical growth in its equity market capitalization since September 2008, where it recorded N9.83 trillion. Compared to the latest market capitalization of approximately 26 trillion, this represents a growth of 164.50% in over 13 years. This is a testament to the growth and increased participation in the market, through capital injection, by both foreign and local investors.
Asides from the listing of new companies, the resilience of the likes of Dangote Cement, Zenith Bank, Guaranty Trust Bank and Access Bank, who were all trading during the time of the market crash have also contributed greatly to the growth of the market.
The rising trend we saw for some days can be attributed largely to the impressive earning announcements by most companies (both 2021 AFS and Q1 Reports), low interest on savings and the clampdown on crypto investors and other Ponzi arrangements. It will fizzle out soon for a massive downward trend especially from profit taking, foreign exchange debacle and liquidity issues. The foundation of the Nigerian Capital Market remained very weak and significantly exposed to foreign players. That NGX cannot boast of 100,000 active investors says a lot in a country of over 200million people while we have over 33million Nigerians having invested in “illegal” crypto. Something is obviously wrong somewhere. The process adopted in the Nigerian capital market is frustrating, needlessly sickening and cumbersome. The investor trades shares on the floor but still has to visit the Registrar to perfect the purchase, why? Hence, we have ever rising unclaimed dividends. Capital market is never a Lagos affair. investors are scattered across the 36 states and FCT and hence they do not need to travel down to Lagos to claim N10,000 unclaimed dividend and perfect shares purchased, NGX and CSCS still operate in the primitive era with archaic computer programmes meant for the 19th century. It is unheard that CSCS is charging fees to open investors account yet they come to the public to scout for investors. You can imagine if banks request for fees before opening accounts