Nigerian stocks lead in Sub-Saharan Africa, recording strong gains following Tinubu’s inauguration speech.
Despite challenges with soaring inflation and weak economic indicators, Nigerian stocks have demonstrated remarkable performance, surpassing its Sub-Saharan Africa counterparts.
Nigerian stocks achieved a month-to-date gain of 6.4% by the end of May 2023, contributing to a market capitalization increase of N1.83 trillion (USD 3.94 billion). The positive market sentiment was partly attributed to President Bola Tinubu’s inauguration speech, which outlined key initiatives to stimulate economic growth and attract investments.
Impressive performance and market capitalization gain
The Nigerian Exchange Limited (NGX) witnessed a significant upswing in May 2023, with most quoted securities delivering impressive returns. The NGX All Share Index (ASI) started the month at 52,403.51 points and closed at 55,769.28 points, representing a substantial increase of 6.42%. In parallel, market capitalization rose by N1.833 trillion (USD 3.94 billion), reaching N30.366 trillion (USD 65.3 billion), marking the first notable increase since March 2023.
Bolstered investor confidence
President Bola Tinubu’s inauguration speech played a pivotal role in bolstering investor confidence in the Nigerian market. The President’s commitment to removing fuel subsidies, unifying exchange rates, and fostering a higher GDP growth rate resonated positively with market participants. Additionally, his emphasis on ensuring repatriation of dividends and profits by foreign businesses further instilled optimism among investors.
Nigeria’s performance in Sub-Saharan Africa
The Nigerian stock market outperformed its counterparts in Sub-Saharan Africa, including South Africa, Ghana, and Egypt, in terms of year-to-date performance until May 2023. While South Africa’s FTSE/JSE All Share Index achieved a gain of 3.2%, Ghana’s GSE Composite Index recorded a gain of 2.76%. In contrast, Kenya’s market experienced a decline of 18.66% during the same period, highlighting Nigeria’s favorable performance.
The Nigerian market witnessed heightened investor activity, as reflected in a 10% increase in market turnover. Investors traded N130 billion (USD 279.9 million) worth of 12.8 billion shares in 217,720 deals during the month under review, compared to N118 (USD 254.1 billion) worth of 11.6 billion shares in 189,007 deals in the previous month.
Cautious approach expected amidst positive sentiments
Although the market has experienced bullish sentiments and the inauguration of President Tinubu has boosted investor confidence, market analysts anticipate a cautious approach to trading. Investors will closely monitor the swift implementation of the new administration’s policies, as their effectiveness will play a crucial role in sustaining the positive market momentum.
Nigeria’s first privately-licensed commodities bourse, AFEX, is currently planning expansion into seven new markets.