The Nigerian equities market has shown remarkable resilience in 2024, despite ongoing economic challenges such as high inflation and rising interest rates.
The market posted an impressive gain of N21.845 trillion, defying mixed economic signals that influenced investor sentiment in 2024.
Shifting gears, the equities market kicked off 2024 on a strong footing, as the local bourse posted an impressive 37.72 per cent gain in full year 2024, defying mixed economic signals that influenced investor sentiment amidst new listings on the bourse.
The equities market of the Nigerian Exchange’s rally in 2024 as the second-best performance among Africa markets.
The key performance indicator of the NGX, the All-Share Index (ASI) went up by 37.72 per cent to close the year 2024 at 102,926.40 points from 74,773.77 points at which it opened trading for the year. Similarly, market capitalisation for the period gained by N21.845 trillion to N62.763 trillion from N40.918 trillion.
The positive market sentiment was evident across several sectoral indices, including NGX Oil & Gas index with a yearly gain of 159.81 per cent. NGX Insurance index rose by 107.64 per cent, while NGX Consumer Goods index appreciated by 52.20 per cent year-on-date (Y-o-D) as at December 27, 2024.
Also, NGX Industrial Goods index rose by 31.47 per cent, while NGX Banking index grew by 21.80 per cent as at December 27, 2024.
In the first half of the year, specifically in January, the bourse crossed the 100,000-point mark for the first time, driven by positive spillover from 2023 and strategic mop up of Dangote Cement. However, this sentiment was not sustained for long, as investors turned their attention to the fixed-income market, attracted by rising yields resulting from the Central Bank of Nigeria (CBN) aggressive rate hikes.
Based on performance over the first ten months of 2024, the total domestic and foreign portfolio transactions in Nigeria’s equity market amounted to N4.913 trillion from January to November 2024.
Meanwhile, local investors remained the dominant force with their stake up by 83.4 per cent. This reduction is attributed to outflows of money from the equities market to the fixed-income market on the premise of high fixed income yields following increases in the anchor rate. On the other hand, foreign investors increased stake in the Nigeria equities market to 16.6 per cent.
Although their stake remains below historical levels, the uptick was primarily fueled by improved foreign investor sentiment toward the reform initiatives implemented by the current administration.
Meanwhile, the debut listing of Transcorp Power, Aradel Holdings and Haldane McCall on the Nigerian equities market resulted in an additional inflow of N5.1 trillion to the bourse. These entrants have contributed to the deepening of the market.
Speaking on the market performance in 2024, vice president of High Cap Securities, David Adonri said, the equities market closed the year 2024 on a positive side, appreciating by 31.47 per cent as at December 30, 2024.
He stated that “it has been a record breaking year and indeed another year of fantastic performance. All sectors of the equities market have achieved outstanding growth with the Oil & Gas sector appreciating the highest with 160 per cent growth followed by Insurance with 92 per cent growth. The banking sector has so far grown the least up by 19.4 per cent.
“The surge in the Oil & Gas sector was propelled by recent deregulation of the petroleum industry. When compared to last year, aggregate dividends paid by listed companies grew by 118 per cent. Among the various Boards, ASEM Board grew the highest, appreciating by 147 per cent.”
According to Adonri, so far in 2024, N5.7 trillion in new capital has been raised across various asset classes on NGX according to the CEO of NGX. The contribution of public offerings by banks in their course of recapitalisation has assisted the boom in the Primary Market.
“There were high profile listings especially those of Aradel Holdings, Transcorp Power and Infrastructure Funds. These belittled the exit of Flour Mills of Nigeria and GSK which voluntarily delisted. The deployment of technology in the Primary Market by NGX via a new public offering portal was a game changer in the distribution of public offerings during the year.”
He added that “so far in 2024, equities have marginally beaten inflation as ASI at 37.9 per cent outperformed inflation at 34 per cent. Unfortunately, the situation for debt is different as MPR at 27.6 per cent leaves a negative return.
“Notwithstanding the negative real returns on debt, the Bonds index on NGX declined, indicating a higher aggregate yield when compared to the previous year. Consequently, with the outstanding performances of equities and debt, the market in 2024 was akin to a candle burning from both ends.”
Responding also, an Investment Banker & Stockbroker, Mr. Tajudeen Olayinka stated that the N21.03 trillion market capitalisation gain in 2024 tells us the presence of huge liquid funds in the hands of institutional investors who currently dominate activities in the stock market.
“It also holds the fact that the future is brighter for some of the listed companies, hence, investors are positioning their portfolios for that brighter future. This is also the reason the market remains resilient in spite of the high interest rate regime,” he said.