Kayode Tokede
Despite the rising inflation eroding returns on investment, the stock market arm of the Nigerian Exchange Limited (NGX) appreciated by N2.08 trillion in November 2022, as investors renewed interest in capitalised stocks.
Precisely, the market capitalisation of the NGX closed trading at N25.959 trillion in November 2022, compared with the N23.878 trillion it closed in October 2022.
Also, the NGX All-Share Index, the index that tracks the general movement of all listed stocks on the Exchange, including those listed on the growth board, regardless of capitalisation, appreciated by 8.72per cent or 3,820.96 basis points to close at 47,660.04 basis points from 43,839.08 basis points the market closed for trading in October 2022.
The stock market performance in November was driven by surge in investors’ interest in Dangote Cement, Airtel Africa Plc, among other highly capitalised stocks on the bourse.
For instance, Dangote Cement saw its price gaining 18.96 per cent to close November trading at N262.30 per share from the N220.5 per share it opened for trading at the beginning of the month, while MTN Nigeria Communications gained 10.97 per cent to close at N218.5 per share from N196.90 per share.
Similarly, Airtel Africa rose by 13.7 per cent to N1,450.00 per share from N1,275.00 per share as Zenith Bank added N1.9 per share to close at N21.9 per share from N20.00 per share it closed for trading in October 2022.
The stock market since July 2022 has witnessed dwindling performance on the backdrop of hike in Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN) in its moves to tackle rising inflation rate.
The stock market in July 2022 plunged by N772 billion to N27.163 trillion and in August, it dropped further by N283billion.
In September, the market capitalisation depreciated by N429 billion or 1.6 per cent month-on-month to N26.451 trillion from N26.88 trillion it opened for trading and in October, the market was down by N2.57 trillion as escalated global energy and commodity crises triggered massive portfolio realignments.
In the period under review, the stock market witnessed increase in interest rate to 16.5 per cent as investors continued to take advantage of the rising yield environment in the fixed-income space.
Investors reacted sharply to four quick successions of MPR hike, beginning with the 13 per cent in May, 14 per cent in July, 15.5per cent in September, and 16.5 per cent in November 2022.
The stock market in the first half of 2022 maintained positive momentum from the prior year in the first half (H1) of 2022 with a return of 21.3 per cent over impressive corporate earnings by listed companies.
Speaking on the stock market performance, the vice president, Highcap Securities, Mr. David Adonri attributed the stock market rally to the fact that some high-network investors’ opted to invest in the stock market.
