Nigerian stock market demonstrated exceptional growth, exhibiting an N18.2 trillion increase over the eleven months preceding November 2024. This occurred despite the Central Bank of Nigeria's (CBN) monetary policy rate (MPR) increases and prevailing macroeconomic headwinds.
Market rallies and robust investor demand, concentrated in the financial services, consumer goods, and industrial goods sectors, have driven substantial bargain hunting by major corporations since the beginning of 2024.
At the beginning of 2024, the overall market capitalization stood at N40.918 trillion, which surged by N18.2 trillion, representing a 44.5 percent increase, to reach N59.107 trillion by November 29, 2024.
As a result, the Nigerian Exchange Limited All-Share Index (NGX ASI) closed at 97,506.87 basis points on November 29, 2024, reflecting an increase of approximately 22,733.10 basis points or 30.4 percent from the 74,773.77 basis points recorded at the year's start.
The stock market's 30.4 percent year-to-date (YtD) growth can be attributed to new listings and heightened investor interest in several blue-chip companies, even as the local economy grappled with double-digit inflation, rising MPR, and fluctuations in exchange rates.
Increased participation from foreign investors has led to significant stock price appreciation for companies such as Airtel Africa Plc, Dangote Cement Plc, Seplat Energy Plc, and Guaranty Trust Holding Company Plc.
Stock Price Performance
Analysis revealed that Dangote Cement's stock price rose by 49.7 percent YtD, closing at N478.80 per share on November 29, 2024, while Airtel Africa saw a 14 percent YtD increase, closing at N2,156.90 per share.
Seplat Energy experienced a remarkable 129 percent gain, closing at N5,300 per share on November 29, 2024.
Additionally, Zenith Bank Plc's stock price increased by 15 percent YtD, closing at N44.50 per share, while GTCO's stock price rose by 30.7 percent YtD, closing at N52.95 per share as of November 29, 2024.
The recent listings of Transcorp Power Plc and Aradel Holdings, currently valued at N2.7 trillion and N2.25 trillion in market capitalization respectively, have significantly contributed to the stock market's growth of N59.107 trillion during the review period.
According to the National Bureau of Statistics (NBS), the October 2024 inflation rate was 33.88 percent, a significant increase from November 2023's 28.2 percent. In response, the Central Bank of Nigeria (CBN) raised the Monetary Policy Rate (MPR) to 27.50 percent in November 2024, up from 18.75 percent in November 2023.
Following the most recent Monetary Policy Committee (MPC) meeting, CBN Governor Olayemi Cardoso reported that discussions centered on escalating inflationary pressures, evidenced by year-on-year increases in both headline food and core inflation measures during October 2024. As a result, committee members unanimously agreed to prioritize price stability.
This marks the sixth increase in interest rates by the CBN since February 2024. In September, the rate was raised to 27.25 percent after a decline in the inflation rate in August 2024.
Additionally, a significant macroeconomic challenge has been the depreciation of the Naira, which fell to N1,663.396 against the dollar in November 2024, compared to N942.117 in November 2023.
Despite these challenges, foreign investor participation in the stock market has risen, with trading volumes reaching approximately N744.34 billion out of N4.47 trillion over the first ten months of 2024, accounting for 17 percent of total transactions. This is a notable increase from N291.38 billion out of N2.9 trillion in the same period of 2023, which represented 10 percent participation.
With a 30.4 percent gain in the stock market over the past eleven months, analysts predict that the market is unlikely to exceed its performance from 2023, when it recorded a gain of 45.90 percent.
Ambrose Omordion, the chief operating officer of InvestData Consulting Limited, provided insights on the market's performance during the first 11 months of 2024. He noted that trading on the Exchange has been supported by a resurgence of buying interest, following a series of reforms that have drawn in foreign investors, despite the varied corporate results from listed companies.
He highlighted that numerous firms across different sectors achieved strong results, while others experienced mixed outcomes. Additionally, some companies reported disappointing figures.