Equities trading on the Nigerian Exchange Limited (NGX) concluded August on an upbeat note, driven by growing investor confidence in listed companies, favorable policies, and a successful earnings season.
The NGX All-Share Index experienced a substantial 3.44% increase, closing the month at 66,548.99 index points. This surge resulted in a year-to-date (YTD) return of 29.85% growth.
Investor Resilience Amid Challenges
Despite concerns regarding rising inflation, interest rate hikes, and the uncertainties surrounding the upcoming 2023 general elections, investor confidence remained robust, resulting in heightened buying activity.
Nigeria Hits 15-Year High
On August 29th, Nigeria’s main shares index reached a historic 15-year high. This significant achievement was attributed to the optimism surrounding President Bola Ahmed Tinubu’s inauguration speech as Nigeria’s 16th president.
The All-Share Index (ASI) of the Nigerian Exchange Limited (NGX) rose by 0.51% to 66,490.34 points from the previous day’s close of 66,151.38. This surpassed the highest value of 66,371.20 recorded on the Exchange on March 5, 2008.
Factors Fuelling Investor Sentiment
Notable comment byDavid Adonri, Executive Vice Chairman of Hicap Securities Limited:
According to David Adonri, “Investors were in the earning season, and what investors will get from dividends is one of the factors that drove the demand for shares in the market during the half year.”
He emphasized that despite current political uncertainties, investors remain optimistic about the potential for a favorable yield environment.
Companies, particularly banks, released their half-year results during the quarter, contributing to the positive sentiment.
Notable Comment by United Capital Analysts:
United Capital analysts highlighted key factors that are expected to boost investor confidence in listed corporates, particularly during earning seasons.
The “Unification of the exchange rate” and “Advocacy for a Lower Interest rate Environment” under the new administration are expected to enhance the earnings performance of Nigerian corporations.
They anticipate a broadly favourable market for the Equities Market in H2-2023, supported by these expectations.
Clariform perspective: Market Predictions
The analysts at United Capital predict that the equities market will be highly favourable for both foreign and local investors in the second half of 2023. Factors such as a cheaper Naira, the removal of multiple taxations, and ease of foreign exchange repatriation will incentivize investment.
Additionally, they anticipate a liquid financial system to stimulate activities in the real sector.
As for the fixed-income market, they believe the government’s objective to lower interest rates will continue to keep the financial system mostly liquid.
The equities market is expected to outshine other segments, driven by strong incentives for both foreign and local investors.
