The bullish trading pattern of 2023 extended into the first quarter of 2024, resulting in a N18.203tn gain for investors in the Nigerian Exchange.
The exchange had closed 2023 with its All-Share Index at 74,773.77 points, indicating a 45.90 per cent growth.
The market capitalisation also grew, settling at N40.917tn from N27.915tn at the end of 2022.
For the first quarter of 2024, the market witnessed a mostly bullish run resulting in new N1tn valued companies like FBN Holdings; Dangote Cement emerged as the first company on the exchange to hit N10tn in market cap.
The listing of Transcorp Power Plc, the second power-generating company on the exchange, spurred the market to hit milestones with regular frequency.
At the end of March, the market capitalisation had risen to N59.120tn, just shy of the historic N60tn mark and the ASI was 104,562.06, indicating a 39.84 per cent appreciation.
Speaking at the pull-out ceremony for the immediate past Managing Director/Chief Executive Officer of the Nigerian Exchange Group, Oscar Onyema, the President of the Chartered Institute of Stockbrokers, Oluwole Adeosun, likened the boom experienced in the market in 2023 and the first quarter of 2024 to that of between 2006 and 2007 before the global meltdown of 2008.
In the period under review, the Consumer Goods Index rose by 43.66 per cent to close March at 1,610.80 basis points.
The NGX-Alternative Security Market also recorded a 135.25 per cent gain during this period, despite the challenges posed by escalating inflation, potential interest rate adjustments, and volatile exchange rates, investor confidence remained remarkably steadfast.
Following the NGX-ASeM was the Industrial Goods Index, which grew by 78.49 per cent year-to-date, closing Q1 2024 at 4,841.20 basis points. The NGX Banking Index and NGX Insurance Index also appreciated by 14.76 per cent and 26.20 per cent, respectively.
Commenting on the market trend in the first quarter, stockbroker David Adonri of Highcap Securities, highlighted that sentiments were what drove the market, not strong fundamentals.
He said, “The equities market grew by 39.84 per cent in Q1 2024. This almost equalled the performance of the market in 2023. The prolonged rally that started last year at the heels of economic reforms continued into the first quarter of 2024. So, many records of performance were broken in the first quarter. ASI of NGX crossed 100,000 while total market capitalisation approached N60tn.
“However, the superlative performance of the market was not driven by concrete improvements in economic or market fundamentals but by sentiment.”
Research Analyst at Parthian Securities, Mercy Okon, remarked that the exchange commenced the first quarter and the year on a robust note, witnessing a remarkable surge in market performance.
“Over the initial six weeks of the year, the market exhibited an upward trajectory, culminating in the NGX All-Share Index surpassing the significant milestone of 100,000 points on January 24, 2024. This surge was predominantly fuelled by substantial gains in banking stocks and high-cap stocks like BUA Cement, Geregu, Dangote Cement and Seplat.
“Additionally, heightened anticipation regarding the full-year financial results, particularly within the banking sector, along with a bandwagon effect, contributed significantly to market optimism during this period.
“However, February saw a notable pullback in the market, primarily driven by profit-taking activities and portfolio rebalancing efforts. Several factors contributed to this downturn, including rising inflation, disappointing corporate earnings, foreign exchange instability, escalating yields in the fixed-income market, and an increase in the monetary policy rate.”
Okon added that market activities showed signs of resurgence, buoyed by the listing of Transcorp Power and corporate actions such as dividend declarations.
Also, she said that the announcement of a fresh recapitalisation exercise for banks had injected further optimism into the market, especially regarding the anticipated earnings results for banks.
“Despite facing two consecutive hikes in the monetary policy rate, the quarter concluded on a positive note. The year-to-date and quarter-to-date return stood at an impressive 39.84 per cent, representing approximately 87 per cent of the year-to-date return witnessed in 2023. “In summary, while the market experienced some volatility and challenges during the first quarter of 2024, it ultimately demonstrated resilience and closed positively, reflecting the underlying strength and potential of the Nigerian equities market,” the analyst stated.
On the outlook for the second quarter of the year, Okon projected mixed performance.
“As market dynamics will potentially be influenced by macroeconomic instabilities (such as continuous rise in inflation and FX instability), corporate actions (such as more dividend declarations and specific stock events like the mergers of Nascon Allied Industries, Dangote Sugar and Dangote Rice and the listing of Dangote foods on the NGX), and capital raising activities in the banking sector.
“Additionally, we foresee that the hawkish monetary stance by the CBN and lacklustre Q1 corporate earnings might drive equity investors towards exploring alternative investment options with more appealing returns,” she projected.