Despite the aggravated damage from the COVID-19 pandemic and the Russian invasion of Ukraine, which amplified the slowdown in the global economy, the country’s capital market activities remain positive in the first half of 2022 as a local and foreign investors on the Nigerian Stock Exchange. Limited (NGX) traded for N831.83 billion worth of shares.
485.4 billion naira of shares were traded in the second quarter (Q2) of the year, representing an increase of 40.11% from the 346.43 billion naira traded in the first quarter (Q1).
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Growth in the market value of shares traded was also reflected in volume as it gained 143.83% to 54.27 billion in Q2 2022 from 22.26 billion reported in Q1 2022, while trading on the stock market rose 8.5% to 320,778 in Q2 2022 from 295,533 reported by NGX for Q1 2022.
Despite the war in Ukraine, lockdowns in China, supply chain disruptions and the risk of stagflation hammering growth, the NGX equity market segment saw a positive sentiment exchange thanks to investor participation to listed fundamental stocks, which led to the market capitalization at the close of Q2 2022 at N27.94 trillion from N25.31tr, it closed in the first quarter of 2022.
The NGX All-Share Index appreciated 10.3% to 51,817.59 basis points in Q2 2022 from 46,965.48 basis points in Q1 2022.
The data revealed that the value of fixed income securities traded increased by 38.7% to 1.01 billion naira in the second quarter of 2022, from 728.9 billion naira in the first quarter of 2022.
According to data from NGX, the volume of fixed income securities traded increased to 972,206.00 in Q2 2022 from 688,564 in Q1 2022.
Additionally, the market capitalization of fixed income securities fell from N21.42 tr in Q1 2021 to N22.23 tr in Q2 2022.
In terms of sector performance, the Oil & Gas index with a gain of 58.06% was the best performer. This is largely due to the rise in world oil prices. It was followed by the industrial goods index, which gained 7.21% over the period, while the consumer goods index rose 5.88%.
The Banking and Insurance index lost 2.04% and 9.98% respectively.
While assessing the market, Managing Director of APT Securities and Funds Ltd, Mallam Garba Kurfi spoke with Daily Trustsaid available data for the half-year showed a 61% increase in total NGX market revenue and a 21.31% gain in ASI compared to the same period a year earlier.
“Among the factors that contributed to this was the fact that most of the major capitalized stocks, namely Airtel Africa, MTNN, Dangote Cement and BUACEMENT, which control more than 70% of the total market capitalization, gained around 50% during the period under review and qualified to be Invest by PFA, which they did,” he said.
Managing Director of ARM Securities Ltd, Mr. Rotimi Olubi, said improved participation of local investors in the market and strong results from some consumer and industrial stocks as well as some banks have boosted investor sentiment.
“The performance of the capital market was impressive in the first half of 2022. The equity market recorded an exceptional performance in the first half, crossing 50,000 points (highest since 2008) in the 18th week and 54,000 points at the end of week 21. We refer to this good performance to the decent results reported by companies, particularly in the industrial sector (Dangote Cement, Lafarge Cement and BUA Cement), the telecommunications sector (MTNN and Airtel Africa) and the goods of consumer and staples (Guinness, Cadbury and Intbrew, Dansugar) and banking (GTBank, UBA, Accesscorp Fidelity),” he said in an exclusive interview with Daily Trust.
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He added that the positive earnings had boosted investors’ confidence in the equity market, adding that the improved participation of domestic players in the market was the main factor that protected NGX from the negative sentiments seen in the global equity market. due to the Russian-Ukrainian conflict.
“As of May 2022, according to data published by NGX, domestic ownership is 93% while foreign ownership is 7%. Domestic participation in foreign participation was 87.23% compared to 12.77% in January 2022,” he said.
Nigerian stock market outperforms others in Africa
Despite the negative sentiments that dominated global markets, the Nigerian stock market outperformed all other African markets during the first half of the year, becoming one of the best performing stock markets in the world.
In the United States, the S&P index, which measures the entire stock market, has fallen 20% this year. In Europe, London’s FTSE is down around 3% while Germany’s DAX is also down 19.3%. In Africa, the Johannesburg Stock Exchange is down 11% and Ghana around 8%. Kenya is down 16.9% and Egypt down 10% as of June 29, 2022.
Chief Financial Officer of Parthian Partners Limited, Olayinka Arewa, said a record number of issuers took advantage of increased market liquidity and launched commercial paper and bonds.
“In particular, there have been more initial issues from new issuers who have tapped into the capital markets for funding,” he said.
He called for faster turnaround times in reviewing applications to ensure a better result in the second half.
CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka, who also identified improved liquidity in the system over the past six months for the positive performance of the Nigerian stock market, added that the crypto market crash brought liquidity back to the stock market. .
“It has been said that more Nigerian investors are actively participating in the crypto space, and thus, the sudden crash, although long anticipated in this market, has caused some affected Nigerian investors to cut their losses, for less opportunity. volatile and recoverable in the equity market,” he said.
Other factors boosting equity market liquidity, he added, are the instant payment of dividends to shareholders electronically (e-dividend), which provides opportunities for immediate reinvestment of those dividends, particularly by institutional investors, who manage client funds and portfolios.
“That hasn’t left out other traditional investors, who have taken advantage of low prices, heading into the financial year-end rallies we saw in early 2022.
“Negative real return in the fixed income market and the need to hedge against inflation. The stock market is an inflation-adjusting market, and so some investors who were willing to hedge against inflation, no matter how much downside risk the market posed, decided to bring liquidity back to the stock market,” he said.
At a recent CEO Roundtable, financial market participants praised NGX for providing a dynamic listing platform that enables governments and enterprises to achieve their business goals.
Speaking on the benefits of listing on the Exchange, CEO of MTN Nigeria Communications Plc, Mr. Karl Toriola noted that MTN has received incredible support from NGX in its listing journey, which has enabled the brand to deepen and diversify its shareholder base.
He mentioned that NGX’s strong corporate governance requirements and guidelines ensure credibility in the capital market and allow access to the general public. He further explained that the recent public offering of MTN Nigeria launched on the Stock Exchange saw around 78% of subscriptions from women with 80% under the age of forty-one, which shows the push for financial inclusion.
BUA Foods Plc CEO, Engr Ayodele Abioye said that listing on the Stock Exchange allows for democratization and public participation, which has enhanced the credibility of the BUA brand. “Listing on NGX presents opportunities for companies to raise capital, fund business growth and implement expansion plans.
“In the first few weeks of our listing, our shares valued at N18 billion on the Exchange rose by 66%. As our share price continues to stabilize, our shareholding has increased by approximately 400% since the IPO and we are beginning to see investor confidence in our business,” he added.