FX Unification: Investors in Airtel, Dangote Cement, 10 Others Gain N9.12trn

Kayode Tokede

Investors in Airtel Africa Plc, Dangote Cement Plc and 10 other leading companies on the Nigerian Exchange Limited (NGX) gained N9.12trillion in value of their investment, about 70.12 per cent of the N13trillion overall market capitalisation gain in 2023.

The other companies are: MTN Nigeria Communication Plc, BUA Foods Plc, Seplat Petroleum Plc, Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO), Geregu Power Plc, Stanbic IBTC Holdings Plc, FBN Holdings Plc, United Bank for Africa Plc (UBA) and BUA Cement Plc.

The stock market by value closed 2023 at N40.917 trillion from N27.915trillion it opened for trading in 2023, indicating an increase of N13 trillion.

Also, the NGX All-Share Index or ASI reached an all-time high of 74,773.77basis points with average return of 45.90 per cent amid post-inauguration rally after Nigeria’s President, Bola Tinubu was sworn in May 29, 2023.

President Tinubu’s foreign exchange and subsidy removal policy impacted the stock market positively as most fundamentals stock hits 52-week high on the back of demand.

According to THISDAY investigation, BUA Cement was the only company that recorded decline in stock price as its value dropped by N25.4billion in 2023, while investors in BUA Cement reap N2.3trilliiion return following 197.54 per cent increase in its stock price to N193.40 per share from N65.00 per share it opened for trading in 2023.

Amid declaring impressive Quarter-on-Quarter (QoQ) results, the stock price of BUA Cement dipped by -0.77 per cent to N97.00 per share from N97.75 per share it closed for trading in 2022.

The Chief Operating Officer, InvestData Ltd, Mr Ambrose Omordion told THISDAY that the stock price of BUA Cement is overpriced on the Exchange, stressing that investors traded the cement manufacturing company with caution amid its nine months result and accounts.

Further investigation revealed that investors return in Dangote Cement and MTN Nigeria soar by 22.57 per cent and 22.79 per cent respectively amid reporting significant increase in foreign exchange losses in nine months ended September 30, 2023 results.   

In the period under review, investors who invested in Dangote Cement stocks gained N1trilliion in market value, while investors return in MTN Nigeria stood at N1.03trillion in 2023.

In 2023, Airtel Africa was the most capitalised company on the exchange, crossing the N7trillion in market value.

The stock price of Airtel Africa gained 15.41 per cent or N252.00 to close December 29, 2023 at N1,887 per share from N1,635.00 it opened for trading in 2023.

According to THISDAY findings, investors in Airtel Africa gained N947.05billion in market value as its market capitalisation closed 2023 at N7.09trillion.

Other notable companies with attractive returns include: Seplat Petroleum with N712.02billion returns, GTCO, N515.05billion, Zenith Bank, N459.96billion, Geregu Power, N625.04billion, Stanbic IIBTC Holding, N469.08billion, FBN Holdings Plc, N454.08billon and UBA, N617.3billion.

Capital market analysts expressed that retail/ institutional investors positioned themselves in fundamental stocks expected to declare dividend for 2022 financial year, stressing that these companies have maintained improve corporate earnings over the years. 

In a chat with THISDAY, the Vice President, Highcap Securities Limited, Mr. David Adnori said the improved liquidity in the system is responsible for the positive performance of Airtel Africa, MTN Nigeria, Dangote Cement among other most valued stocks on the NGX.

He expressed that confidence was restored in the stock market when the Federal Government opted to reform the foreign exchange market, and remove subsidy on fuel.

Other factors that drove liquidity in the stock market in 2023, he added were, “instant payment of dividends to shareholders through electronic means (e-dividend), provides opportunities for immediate reinvestment of these dividends, especially by institutional investors, who manage funds and portfolios for clients.”

He added that, “Negative real return in the fixed income market and the need to hedge against inflation. Equity market is an inflation adjusting market, and so, some investors who were willing to hedge against inflation, irrespective of the downside risk that the market poses, decided to bring liquidity back to the stock market and it impacted on these companies’ stock prices.”

Speaking on the stock market performance in 2023, the Chief Executive Officer, Wyoming Capital and Partners, Mr. Tajudeen Olayinka, said, “Market in 2023 has been quite eventful and bullish.

“We saw a market that picked its 2023 position way back in November 2022, when it was obvious that the three leading presidential candidates, namely: Asiwaju Bola Tinubu, Peter Obi and Alhaji Atiku Abubakar, that could succeed former President Muhammadu Buhari, were pro-market. And so, the build-up to the bullish run in 2023 that started in November 2022 was a demonstration of market confidence in a private sector-centric president.

“The inaugural speech of President Tinubu, with respect to fuel subsidy removal and exchange rate unification, eventually activated the market-wide pent-up confidence that had always been there but eluded the market ever since. This market-wide confidence remained throughout the year.”

The Managing Director, ARM Securities Limited, Rotimi Olubi said 2023 tested the resilience of the Nigerian stock market against global agencies’ downgrades (FTSE and MSCI) and macroeconomic challenges including persistent inflation, high-interest rates, and foreign exchange losses.

“Despite all these, the Nigerian equities market proved to stand strong, hitting historic highs with the NGX All Share Index reaching an unprecedented 70,000 points and achieving an impressive 45.90per cent YtD return, culminating at 74,773.77 basis points by year-end. The market’s robust bullish trend began post the implementation of key policy reforms following President Bola Ahmed Tinubu’s administration inauguration on May 29th, 2023.

“These reforms, notably FX liberalization and the removal of PMS subsidies, spurred investor optimism, resulting in substantial gains, particularly in the Banking and Oil and Gas sectors.  Furthermore, impressive earnings in the face of inflationary pressures and FX losses further boosted investor confidence, contributing to the remarkable market returns,” Olubi said.