The Nigerian Stock Exchange (NGX) All-Share Index experienced a significant appreciation of 18.9% to close at 60,108.86 index points in the first half of 2023. This marks the highest point the index has reached in over 15 years since it soared to 63,016.6 points.
Analysts attribute this rally to various factors, including the policies implemented by the new administration of President Bola Tinubu, the harmonization of different exchange rates, and the floating of the Nigerian naira.
Equity trading on the Nigerian Exchange Limited (NGX) concluded the first half of the year on a positive note, with the NGX All-Share Index gaining 18.9% and closing at 60,968.27 index points.
This milestone achievement represents the index’s highest level in 15 years since March 5, 2008, when it stood at 66,381.20 points.
The month of June witnessed a notable rise in the All-Share Index, with a 9.32% increase, breaking a four-year streak of losses for stocks during this month. It also marks the best monthly performance for the Nigerian stock market in approximately two and a half years.
Despite concerns regarding rising inflation, interest rate hikes, and uncertainties surrounding the fallout of the 2023 general elections, investor confidence remained strong, leading to increased buying activity.
The positive sentiment among investors can be attributed to several factors, including the peaceful transition of power following the 2023 elections and favorable policies introduced by President Bola Tinubu’s administration. These policies include the removal of fuel subsidies, the streamlining of exchange rates, and the floating of the naira.
Investors responded positively to the changes in Nigeria’s foreign exchange operational framework and viewed President Bola Tinubu’s decision to suspend Central Bank Governor Godwin Emefiele, who had implemented restrictive policies affecting their profits, as a favorable move.
Examining the market performance, data from Nairametrics revealed that the All-Share Index opened the trading quarter at 51,251.06 index points in January 2023 and closed at 60,968.27 points at the end of the first half of the year on June 30, representing a gain of 9,717.21 basis points or 18.9%.
Further analysis showed that the Nigerian Exchange Limited (NGX), which started the year with a market capitalization of N27.915 trillion, closed the quarter at N33.197 trillion, indicating a year-to-date gain of about N5.282 trillion or 18.9%.
Market analysts believe that the renewed sentiment in the local stock market has been driven by a desire to increase capital gains, as stock prices remained relatively low due to market volatility caused by unstable policies and the buildup to the 2023 general elections.
A fundamental shift has been observed in the NGX over the past few years, with more local institutions and retail investors participating in the market compared to foreign portfolio investors. This shift has naturally reduced volatility in stock prices, as local investors have greater faith in the domestic market. Despite the uncertainties in the environment, the NGX All-Share Index continues to rise.
Market experts believe that the expectation that the policies implemented by President Bola Tinubu’s administration will encourage foreign investment inflows is the primary trigger behind the stock market rally. They also note that some of these policies may lead to a short-term increase in the inflation level, and historically, stock prices tend to rise alongside inflation.
The emergence of President Bola Tinubu following the election has brought stability to the market, easing initial tension
