Kayode Tokede
As the Nigerian Exchange Limited (NGX) market capitalisation closed at N27.9 trillion in 2022, the likes of Airtel Africa Plc, Dangote Cement Plc, MTN Nigeria Plc and 17 other highly capitalised stocks contributed about 92.6 per cent or N25.85 trillion in market value.
THISDAY had reported that the stock market in 2022 gained N5.62trillion, attributable to domestic/ institutional investors buying interest in cheap fundamental stocks such as MTN Nigeria, Airtel Africa, Dangote Cement Seplat Petroleum, Okomu Oil Palm, Guinness Nig Plc, among others.
Airtel Africa, according to THISDAY, findings still maintains leading position as the most capitalised stock in 2022, adding 22 per cent or N6.14 trillion to market capitalisation.
The stock price of Airtel Africa added N680 to close at N1,635.00 per share from N955 per share it opened for trading.
Analysts have attributed growth in Airtel Africa’s stock to foreign investors surge participation in 2022 and the telecommunication sustained dividend pay-out to shareholders.
The telco company said its underlying profit after tax dropped by 1.5 per cent to $330 million in September 2022, lower than the $335million that was reported during the comparable half year ended September 2021.
Closely following Airtel Africa was Dangote Cement Plc with N4.45 trillion in market capitalisation, followed by MTN Nigeria with N4.38 trillion in market capitalisation.
THISDAY investigation revealed that Dangote Cement’s stock price added N4.00 per share to N261 per share as MTN Nigeria gained N18.00 per share to N215.00 per share.
Another cement manufacturing company, BUA Cement Plc also crossed the N3 trillion mark in market capitalisation to N3.3trillion as BUA Foods was the only company with N1.1trillion in market capitalisation.
BUA Foods was admitted to the Exchange daily listing at N40 per share and closed 2022 at N65 per share following high demand by retail/institutional investors.
Capital market analysts expressed that retail/ institutional investors positioned themselves in fundamental stocks expected to declare dividend in 2022 financial year, stressing that these companies have maintained improve corporate earnings over the years.
In a chat with THISDAY, the CEO, Wyoming Capital & Partners, Mr. Tajudeen Olayinka 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.
Other factors driving liquidity in the equities market he added are, “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 equity market and it impacted on these companies’ stock prices.”
On his part, the doyen of the Nigerian capital market, Mr Rasheed Yusuf, said the key drivers to these stocks’ contribution to the capital market are increasing global oil price and impressive corporate earnings.
According to him, “The current global oil price that is above $100 per barrel has translated into more revenue for the federal government and more spending. Since there is more revenue for the government, there will definitely be more spending and more business opportunities for individuals and companies listed on the NGX. Everybody was thinking Nigeria will be in an economic crisis but with oil revenue above $100 per barrel over the Ukraine-Russia crisis, the government has been able to manage the subsidy.
“The global oil price has breathed a new life into companies in the country and investors’ expectation is that these companies will make good profit and it has contributed to growth in their stocks. Most of them recently released the 2021 financial year, first quarter results and we have seen impressive corporate earnings. The performance of these companies has reflected in their corporate earnings
Despite these companies’ contribution to overall N27.9trillion market capitalisation in 2022, some stocks recorded decline amid foreign exit due to scarcity of foreign exchange and hike in inflation rate.
For instance, Nestle Nigeria dropped by N456.50 to N1,100.00 per share from N1,556.50 per share it opened for trading, but contributed N871.9 billion to market capitalisation in 2022.
Highly capitalised stocks such as Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO), Stanbic IBTC Holdings Plc, FBN Holdings Plc, Access Holdings Plc, and United Bank for Africa Plc (UBA) depreciated in stock prices in 2022.
Zenith Bank dropped by N36.1 billion in market capitalisation to N753.52 billion in 2022 as GTCO dropped by N88.29 billion in market capitalisation to N676.92billion.
