Investors gain N15.6 trn in H1’24 amid monetary policy tightening

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NGX axes 30 companies over corporate governanceDespite the lull in economy and other challenges, investors on the Nigerian Exchange Limited, NGX   gained over N15.6 trillion in the first half of the year, H1’24, a situation attributed to the forex market reforms introduced by the Central Bank of Nigeria, CBN.

Specifically, the market capitalisation, which represents the total value of equities listed on the Exchange, rose to N56.601 trillion at the end of H1’24 from   N40.917 trillion at the end of December 2023.

Similarly, another gauge of the market, NGX All Share Index, ASI rose to 100.057.49 points at end of H1’24 from 74,773.77 points at the end of December 2023.

The Year-to-Date, YtD return of the ASI stands at an impressive 33.81% despite recent bearish trends seen in Q2 of the year.

Q1and Q2 performance

Meanwhile, the equities market recorded mixed performances in the first two quarters of 2024.

The first quarter saw an return of 39.84%, driven by strong company earnings, and positive dividend announcements and also propelled by/ the listing of Transcorp Power Plc, a subsidiary of Transcorp Plc on the NGX.

The company listed 7.5 billion shares at N240.00 per share by introduction on the Main Board of the Exchange.

The market positive sentiment among investors during the quarter was also attributed to several factors, including favourable policies introduced by President Bola Tinubu’s administration such as the removal of fuel subsidies, streamlining of exchange rates and the floating of the naira.

By contrast, the second quarter experienced a decline, with returns falling to -4.31% as of the close of the last trading day of June 28th.

The downturn   in Q2’24   was largely attributed to the increased monetary tightening by the CBN which triggered further increase in   interest rate, hence making fixed income investment more attractive compared to the equities market.

Analysts’ remarks         

Financial analysts emphasized that the FX reform initiated by the CBN has brought in some confidence in the market leading to the attraction of the foreign investors that have helped to fuel the market.

Analysts at InvestData Consulting stated : “Although, we see fiscal and monetary policies trying to return the nation’s economy to the path of recovery, despite the continued mismatch of policies and implementation style   while   oscillating oil production output persist in the midst exchange market challenges.

“ Ahead of the half-year earnings season, more companies like Ucap, Accesscorp, MTNN and UACN have informed the market of their closed period and board meetings to approve the second quarter earnings report, in the face of    more Annual General Meetings notifications, just as some other companies presented resolutions from their meetings. The latest were from MRS Oil Nigeria, among others, while Airtel Africa updated the market of its ongoing share buyback. SterlingNG, Ucap and FBNH informed the market of yet another insider dealing in its shares.    In the midst of all these, it is safe for investors to target companies with consistent track records of dividend payment, strong fundamentals and growth prospects that will support further growth in earnings which price feeds on in any market cycle.”

Commenting, former President, Chartered Institute of Stockbrokers, CIS,    Olatunde Amolegbe , said,

“The CBN’s reform of the FX market has led to increased confidence by foreign investors that has helped to boost the market even with the support of local institutional investors.”

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