The Nigerian Exchange Limited (NGX) ended 2024 on a historic high, with its All-Share Index (ASI) delivering a remarkable year-to-date (YTD) return of 37.65 per cent.
This significant growth underscores the resilience and potential of Nigeria’s equities market, even as the country grappled with economic challenges such as soaring inflation, currency depreciation, and ongoing security concerns.
The ASI closed the year at 102,926.40 points, representing a milestone achievement for the NGX. This performance was driven by renewed investor confidence, strategic corporate actions, and favorable government policies, which collectively fueled optimism and reshaped market dynamics.
Quarterly Performance: A Tale of Fluctuations
Market performance throughout 2024 reflected a mix of highs and lows, as the equities market navigated through periods of strong growth and temporary corrections.
The year started with robust momentum, as the NGX recorded an impressive 39.84 per cent return in the first quarter. This performance was fueled by strong corporate earnings, generous dividend announcements, and investor enthusiasm sparked by policy reforms introduced by President Bola Tinubu’s administration.
Key reforms included the removal of fuel subsidies, unification of exchange rates, and the floating of the naira, which bolstered economic sentiment and enhanced liquidity.
The bullish trend gave way to modest corrections in second and third quarters, with the ASI declining by 4.31 per cent and 1.50 per cent, respectively. These quarters were characterized by economic headwinds, including persistently high inflation, a weakening naira, and a newly introduced windfall tax that disproportionately affected the banking sector.
Additionally, policy decisions by the Central Bank of Nigeria, such as a recapitalization plan requiring commercial banks to raise N4tn in fresh capital over two years, and a high-interest rate environment, shifted investor focus toward fixed-income securities, dampening equities performance.
The market rebounded in the fourth quarter, posting a 4.43 per cent gain as investor confidence strengthened. The positive sentiment was driven by new listings, recapitalization efforts, and strategic initiatives by listed companies.
Key Drivers Of Market Resilience
Several factors underpinned the exceptional performance of the Nigerian equities market in 2024. A significant contributor was the surge in new listings and fundraising activities facilitated by the Nigerian Exchange Limited (NGX), which saw an impressive N8.1tn worth of shares listed between January and November. This influx of capital was driven by 20 companies, including 10 financial institutions and two breweries, seeking to expand and strengthen their financial positions.
In the banking sector, the Central Bank of Nigeria’s (CBN) revised capital requirements—mandating N500bn for internationally authorized banks and N200bn for national banks, among others—spurred financial institutions to raise capital through various avenues such as public offers, rights issues, private placements, and listings by introduction. These strategic moves positioned banks to meet regulatory thresholds while enhancing their growth potential.
The brewery sector also played a pivotal role, with Nigerian Breweries Plc and International Breweries Plc leveraging equity markets to reduce debt exposure and enhance financial flexibility. These measures not only bolstered their balance sheets but also positioned the companies for sustained business expansion.
Major listings further boosted market momentum. Aradel Holdings Plc made headlines with the introduction of N3.05tn worth of shares, while Transcorp Power Plc added N1.8trn to the bourse through its listing. Additionally, Haldane McCall Plc contributed with the introduction of 3.12bn shares valued at N11.99trn. These substantial additions to the exchange not only elevated market capitalization but also amplified investor interest and confidence in the market’s potential.
Policy reforms by the federal government also played a critical role in shaping the market’s success. The favorable regulatory environment created a supportive backdrop for market activities, attracting both domestic and foreign investments. These reforms underscored the government’s commitment to fostering economic stability and growth, further solidifying the equities market’s resilience in a challenging economic landscape.
Overall Market Performance:
The overall performance of the Nigerian equities market in 2024 demonstrated remarkable growth and resilience. According to data obtained by NewsNGR, the All-Share Index (ASI), which serves as a key barometer of the performance of Nigerian stocks, opened the year at 74,773.77 points on January 2 and closed at 102,926.40 points on December 31. This reflects a substantial gain of 28,152.63 basis points, translating to a year-to-date growth of 37.65 per cent.
Market capitalization, a measure of the total value of listed equities on the Nigerian Exchange Limited (NGX), also saw impressive growth. Starting the year at N40.917tn, the market closed 2024 at N62.763tn, representing a YTD gain of approximately N21.846tn.
This robust performance underscores the resilience of the Nigerian equities market, which thrived despite prevailing economic challenges. The significant growth in both the ASI and market capitalization highlights investor confidence and the effectiveness of market-driven reforms and strategic corporate actions throughout the year.
Experts’ Review:
Financial experts agreed that the Nigerian equities market witnessed remarkable growth in 2024, with the All Share Index (ASI) delivering an exceptional performance despite economic headwinds.
They noted that despite economic challenges, domestic investor participation and technological advancements ensured market resilience and robust capital activity.
In an exclusive interview with NewsNGR, Mr. David Adonri, Managing Director of Highcap Securities Limited, provided a detailed breakdown of the year’s achievements.
Adonri noted that as of December 30, 2024, the ASI closed at an unprecedented 103,149.35 points, reflecting a 37.9 per cent increase from the beginning of the year.
The index’s highest point was recorded on March 14, 2024, when it peaked at 104,056.21. This marks a continuation of strong growth from 2023, when the ASI appreciated by 45.4% to close at 74,502.58.
“It has been a record-breaking year with fantastic performance across all sectors of the equities market,” said Mr. Adonri. Among the standout performers, the Oil and Gas sector surged by 160 per cent, driven largely by the deregulation of the petroleum industry. The Insurance sector followed with a 92 per cent increase, while the Banking sector, though growing the least, still achieved a 19.4 per cent rise.
Aggregate dividends paid by listed companies saw a 118 per cent increase compared to 2023, signaling robust corporate performance. Among the various boards, the ASEM Board led the pack with a remarkable 147 per cent growth.
According to Adonri. the year also saw significant activity in the Primary Market, with N5.7tn in new capital raised across various asset classes on the Nigerian Exchange Limited (NGX). Public offerings by banks during their recapitalization efforts played a pivotal role in this boom.
“High-profile listings such as ARADEL, TRANSCORP POWER, and Infrastructure Funds overshadowed the voluntary delisting of FLOURMILLS and GSK,” noted Mr. Adonri. The NGX’s deployment of a new public offering portal revolutionized the distribution process, making it a game-changer for the market.
He said that equities managed to marginally outpace inflation, with a year-to-date return of 37.9 per cent compared to the 34 per cent inflation rate. However, the story was different for the debt market. The Monetary Policy Rate (MPR) at 27.6 per cent resulted in negative real returns, even as the Bonds Index on NGX declined, indicating higher aggregate yields compared to the previous year.
An Investment Banker and Stockbroker, Tajudeen Olayinka, highlighted the resilience of the Nigerian stock market despite various challenges.
“The market weathered high interest rates, inflationary pressures, foreign exchange losses by public companies, and exchange rate volatility,” he remarked.
“Although the ASI did not reach the record levels seen in 2023, the delayed year-end rally—attributed to procedural delays in public offers and capital verification issues with the Central Bank of Nigeria (CBN)—demonstrated the market’s adaptability.
“Domestic investors played a crucial role in stabilizing the market, offsetting potential volatility and ensuring sustained activity. “2024 has been a year of resilience for the Nigerian stock market,” Olayinka concluded.
The outstanding performances in equities and debt markets underscore the growing confidence in Nigeria’s capital markets. As technology continues to enhance market operations and domestic participation remains strong, the stage is set for sustained growth in 2025, even as challenges persist.