Investors on the Nigerian stock market grew their investment by N1.833 trillion in the month of May, 2023 amidst strong buying sentiments.
The power of government policy statement was obvious on the Nigerian Exchange during the month, following the peaceful transition of power to the new administration’s pro-market policy statements. This triggered an increased buying interest in the hope that policies will impact positively on major sectors of the economy and the market, as the new government unfolds its strategies and agenda to achieve all that were promised.
The market capitalisation gained by N1.833 trillion to close at N30.367 trillion on May 31, 2023 from N28.534 trillion at which it opened for trading activities for the month. Also, the overall market performance measure, All-Share Index (ASI), which tracks the general market movement of all listed equities on the Exchange, rose by 6.42 per cent to close at 55,769.28 points on May 31, 2023.
Financial analysts attributed market performance in the period review to better-than-expected corporate earnings, growing optimism among market players waxed stronger for the new administration, while the current level of market volatility provides entry opportunity for core investors.
Speaking on market performance in May, the chief operating officer of InvestData Consulting Limited said that “all classes of equities on the exchange witnessed a rally on the inflow of funds as investors and traders took position in low, medium and high cap stocks, even as many more carried out their annual general meetings and paid dividend.
“These supported the ongoing dividend income reinvestment in the market arena that had equally enhanced liquidity in the equity space, coupled with the better-than-expected Q1 numbers.”
The managing director of HighCap Securities Limited, Mr. David Adonri, said that investors are in the earning season and what investors will get from dividend is one of the factors that is driving the demand of shares in the market.
Looking forward, Adonri, said the President’s speech addressed three critical areas of national need; insecurity fuel subsidy and unification of the exchange rates, maintaining that Tinubu’s remedial plans to tackle the challenges could boost the economy and attract investments.
“I would attribute this gain to a new government bounce as investors are happy and this means that their confidence has doubled compared to how it closed last week. The policy announcements made by the President resonated well with investors and I believe that his comments on the pressure points were quite stimulating and this is what resulted in the huge gain,” he said.
The managing director, Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe stated that a demographic shift has happened in the NGX in the last few years saying, “We now have more local institutions and retail investors in the market than foreign portfolio investors.
“The reverse use to be the case, this shift has naturally reduced volatility in stock prices as the locals are likely to have more faith in the local market than foreigners. That is why you see the NGX ASI continuing to rise despite all the uncertainties in the environment.”
On market outlook, Cordros Securities Limited said, “Considering that we have previously argued that the new administration’s stance and intent to resolve key policy issues, particularly around the current forex framework and oil subsidy payments will be key catalysts for a better-performing equities market, we view the new president’s speech as positive for the equities market.
“Particularly, we believe the president’s statements on resolving current issues around multiple exchange rates and rectification of the current FX repatriation sit well with investors, evidence of which is the positive showing at the end of the month’s session.”
Cordros however noted that policy reforms from the new administration have to be overarching to have a lasting impact on the local bourse over the long term.
