- The Nigerian stock market has seen a significant rally in the first half of 2023, with the All-Share Index (ASI) crossing 60,000 index points.
- Market experts attribute the rally to several factors, including the policies of the new administration of President Bola Tinubu, the harmonization of different exchange rates, and the floating of the naira.
- Investors are rebalancing their portfolios in readiness for strong half-year results from listed companies.
The Nigerian stock market has seen a significant rally in the first half of 2023, with the All-Share Index (ASI) crossing 60,000 index points.
Some market experts in an exclusive interview with Nairametrics attributed the rally to several factors, including the policies of the new administration of President Bola Tinubu, the harmonization of different exchange rates, and the floating of the naira.
Equity trading on the Nigerian Exchange Limited (NGX) closed trading on Tuesday, June 27th, 2023, in the green territory as the NGX All-Share Index appreciated by 1.3% to cross 60,000 index points. This is the highest point the ASI has reached in over 15 years.
What the experts are saying
Former President of the Chartered Institute of Brokers (CIS) and the Managing Director of Arthur Steven Asset Management Limited, Mr Olatunde Amolegbe in an exclusive chat with Nairametrics stated that the basic trigger for the stock rally was the economic policies of the new administration of President Bola Tinubu, which led to the removal of fuel subsidy and liberalization of the foreign exchange policy.
Amolegbe said that the expectation that the policies will encourage the inflow of foreign investment is the primary trigger that is causing the stock market rally.
- “The second trigger will include the fact that some of these policies will lead to a short-term increase in inflation level and typically stock prices tend to rise along with inflation,” he said.
He explained that the other driver might also be the fact that we are moving towards the end of the first half of the year, and this normally led to portfolio rebalancing by fund and asset managers,
- “They rebalance their portfolio every quarter and every half year and this normally results in the stock rally,” he said.
The Managing Director, of Crane Securities Limited, Mr Mike Eze said the result of the election which brought President Bola Tinubu stabilized the market.
- “At the beginning of the year, there was so much tension and anxiety because of the election. When the election was over, investors saw that the tension did not lead to what was expected, it brought stability to the market.
- And once the market is stable, it leads to a rally which means there is adequate demand for stocks in the capital market. So, one of the major reasons that led to stocks’ rally in half a year was the election that led to the emergence of Bola Tinubu as president of Nigeria,” he said.
He noted that policies which are market friendly introduced by the new president such as harmonization of the different exchange rates, the shake-up in the apex bank which trickle down to the money deposit bank, and the floating of the naira were major drivers for the rally.
Eze added that the removal of fuel subsidies further made the country attractive to foreign investors and high-net-worth local investors.
He noted that many investors are rebalancing their portfolios in readiness for half-year results that will hit the market any moment from now.
- “Most quoted companies, particularly from the banking sector have done relatively well and so the expectation is that there will be a sumptuous return on investment.
- They are repositioning and re-investing in other sections of the market and by so doing it led to diverse action which led to the rally that we are witnessing this half year,” he said.
What you should know
According to available statistics obtained by Nairametrics, the equities market on Tuesday closed with capital gains of N421 billion.
The All-Share Index (ASI)- the barometer that measures all share prices at the Nigerian Exchange (NGX), continued its winning streak as the benchmark index gained 1.30% to settle at 60,108.86 points, the highest point in over a decade (precisely 5 March 2008 when it was 66,381.20).
Gains in MTNN (+2.77%), Zenith Bank (+4.62%), and GTCO (+5.20%) buoyed the broad market’s strong performance.
As a result, the year-to-date (YTD) return rose to 17.28%, while market capitalization gained N421.19 billion to close at N32.73 trillion.
Analysis of today’s market activities showed trade turnover settled lower relative to the previous session, with the value of transactions down by 4.01%.
A total of 763.70 million shares valued at N12.53 billion were exchanged in 9,463 deals. Access Holdings (+3.61%) led the volume chart with 111.67 million units traded while GTCO (+5.20%) led the value chart in deals worth N2.69 billion.
Portfolio Managers are watching interest rates closely. With monthly rate at 6perceht, one can get more returns by investing in the stock market at this this time. A conoil an N40 in January and now at N82 shows how much the January investors have made so far if they decide to sell.