Article Summary
- Market capitalization recorded a gain of N1.833 trillion in May 2023.
- Investors reacted positively to President Bola Tinubu’s no more fuel subsidy and immediate unification of exchange rates’ comments on Monday.
- The market capitalization, which grew by N1.52 trillion in the previous session, gained about N17 billion to close the month at N30.366 trillion.
Equity trading on the Nigerian Exchange Limited (NGX) finished the month of May in the green territory as the NGX All-Share Index appreciated by 6.42% to close at 55,769.28 index points.
Nigeria’s main shares index which has been on the low profile had on Tuesday 30th May soared to its single biggest daily gain in about two years as investors cheered Bola Ahmed Tinubu’s inauguration speech as Nigeria’s 16th president.
The main shares index rose 5.2%, representing about 81% of the month’s total gain as financial markets in Africa’s biggest economy welcomed the smooth handover to a new government after closely fought elections.
The new President had said that monetary policy needs thorough housecleaning adding that the Central Bank must work towards a unified exchange rate and reduction of interest rate.
Tinubu also stated that his administration will be targeting higher GDP growth, creating jobs, and working towards and ensuring that investors and foreign businesses repatriate their hard-earned dividends and profits home.
Market performance
Available statistics to the Nairametrics showed that the All-Share Index, which is the broad index that measures the performance of Nigerian stocks, opened the trading month at 52,403.51 index points at the beginning of trading on May 2, 2023, and closed at 55.769.28 points at the end the month on May 31, gaining 3,365.77 basis points or 6.42%.
Further analysis revealed that activities on the Nigerian Exchange Limited (NGX) which opened the trading year at N28.533 trillion in market capitalization at the beginning of trading, closed the month at N30.366 trillion, hence has earned a month-to-date gain of about N1.833 trillion or 6.42%.
Operators’ reactions
Reacting to the development, the Executive Vice President, High-cap securities, David Adonri, said the President’s speech addressed three critical areas of national need – insecurity fuel subsidy, and unification of the exchange rates.
Adonri maintained that Tinubu’s remedial plans to tackle the challenges could boost the economy and attract investments.
“I would attribute this gain to a new government bounce as investors are happy and this means that their confidence has doubled compared to how it closed last week.
The policy announcements made by the President resonated well with investors and I believe that his comments on the pressure points were quite stimulating, and this is what resulted in the huge gain”, he said.
The Managing Director of Arthur Steven Asset Management Limited, Mr Olatunde Amolegbe in an exclusive chat, said the reaction of the market is expected.
- “The issues such as high-interest rates, multiple exchange rates, slow GDP growth, and the inability to repatriate dividends of foreign investors are some of the issues that have held the economy and prevented the stock market from reaching its full potential.
- The president announcing his intention to tackle these issues was received very well by market operators which led the ASI to gain 5.2%, the largest one-day gain in the index for about two years.
- My expectation is for the momentum to continue in the few days as investors continue to digest the implication of these government policies.
- Despite the short-term pains that might come with this policy prescription, the expectation is that medium to long term, the economy will be much better, which is the reason why we are seeing this positive change today,” he said.
What you should know
The market capitalization, which grew by N1.52 trillion in the previous session, gained about N17 billion to close the month at N30.366 trillion. This meant that investors have now gained about N1.68 trillion in two days.
The gain came as a result of sustained demand in the shares of MTNN (+0.40%), BUA Foods (+5.61%) and Geregu (+1.68%). At the close of business, the volume of stocks traded stood at 661.51 million shares valued at N18.998 billion which exchanged hands in 10,024 deals.
This is in contrast with the volume of stocks traded which stood at 1.09 billion shares while the value of stocks traded stood at N15.799 billion in 9,916 deals in the previous trading session. This represents N34.797 billion staked by investors in 1,719.509 billion shares in two days.