The Nigerian All Share Index crossed 50,000 on Wednesday, May 4th closing trading at 50, 126 points.
This is the first time the All-Share Index, which is the broad index that measures the performance of Nigerian Stocks has gone past the 50,000 mark since July 2008 when it closed at 53,110. The ASI rose to as high as 65,652.4 in February 2008, its highest ever.
The total capitalization of the equities market now stands at a whopping N27.9 trillion up from N22.2 trillion at the end of December 2021. Stocks have now gained a whopping N5.7 trillion in a space of 4 months and a week.
Nigerian Stocks defy global headwinds
Against the backdrop of a global sell-off, Nigerian All Share Index has defied odds gaining for the last 18 straight days taking the year-to-date gains to over 21.5%. The ASI is now trading at 51, 903 and is likely to keep sustaining the surge.
- Globally, stocks have had a difficult year exacerbated by rising inflation and geopolitical challenges.
- The Nigerian Economy has also faced difficulties with rising inflation, scarcity of forex, and a rise in Ponzi schemes. However, stocks continue to rise amidst an increase in demand from investors with little to no alternative investments.
- At the end of the week, stocks like MTN, Airtel BUA, Guinness, and Nigeria Breweries had all racked up double-digit gains yar to date propelling a surge in share prices that has unlocked tens of billions in market valuation for investors.
What is driving the bull run?
In an earlier article, Nairametrics had explained the probable triggers for the stock market bull run citing the following reasons.
- Most investors are overweight on fixed income securities such as treasury bills, bonds, and commercial papers.
- Thus, they see the stock market as a viable alternative especially with the most highly capitalized stocks at a single-digit price to earnings ratio.
- Some also point to high dividend yields for some valuable Nigerian stocks as an attraction. Dividend yields for some stocks traded at a higher premium to fixed income investments which offered single-digit yields.
- Another interesting thing to note is that most of the investors’ driving volumes are local investors rather than foreign investors.
Global Selloffs
The world endured another global market sell-off on Monday and early on Tuesday as investors dumped equities and cryptos in fear.
- The FTSE All-World index is down 3% and hitting its lowest level in more than a year.
- Wall Street recorded the steepest one-day sell-off since 2020 as investors feared the impact of rising inflation and interest rates across some of the world’s largest economies.
- Dow Jones shed 653.67 points, or 1.99%, to 32,245.70, S&P 500 slipping 3.2% to 3,991.24, while Nasdaq dropped 4.29% overnight to 11,623.25.
- In early trading on Tuesday, Asian stocks continued with a sell-off. Hong Kong’s Hang Seng index fell 2.8 %.
- Chinese tech stocks also fell massively with the Hang Seng Tech index shedding 3.6%.
- China’s CSI 300 index of Shanghai- and Shenzhen-listed shares fell by 1.5% at some point during the day.
- Meanwhile, the price of Bitcoin fell below $30,000 for the first time since July 2021 as investors faced massive liquidation of their positions.
Reminder…
In 2008, when the world was undergoing a global financial crisis, the Nigerian stock market was at its crescendo retail demand was driven by fear of missing out on public offers and private placements. However, the stock crash started in July same year falling to as low as 19, 825 by March of 2009 a year after it it was above 63,000.
