Stock market gains by N2.08trn in November


Despite inflation rate eroding return on investment, the stock market of the Nigerian Exchange Limited (NGX) appreciated by N2.08 trillion in November 2022 as investors renewed interest in large and medium capitalised stocks.

The market capitalisation closed trading at N25.959 trillion in November 2022 from N23.878 trillion it closed for trading in October 2022.

Consequently, the NGX All-Share Index, the index tracks the general market movement of all listed stocks on Exchange, including those listed on the growth board, regardless of capitalisation appreciated by 8.72 per 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 is driven by investors’ surge in interest in Dangote Cement, Airtel Africa Plc, among other highly capitalised stocks on the bourse.

Take for instance, Dangote Cement saw its price gaining 18.96 per cent to close November trading at N262.30 per share from N220.5 per share it opened for trading, while MTN Nigeria Communications gained 10.97 per cent to close at N218.5 per share from N196.90 per share.

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 inflation rate and uncertainty surrounding 2023 general elections.

The stock market in July 2022 plunged by N772 billion to N27.163 trillion, and in August, it dropped further by N283 billion.

In September, the market capitalisation depreciated by N429 billion or 1.6 per cent Month-on-Month to N26.451trillion 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 has 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 in MPR hike, beginning with 13 per cent in May, 14 per cent in July, 15.5 per 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 increase to CBN’s redesign of the Naira, stressing that some high-network investors’ opted to invest in the stock market.

According to him, “The only thing that drives stock market performance for the month of November is the effect of CBN’s redesigning of the Naira. Otherwise, most of the economic factors were negative against the stock market. One can suspect some rich investors have channeled their funds through the stock market to beat CBN’s policy.

“The macroeconomy is in total disarray considering a hike in inflation, flood disasters, and tension towards 2023 general elections.

“Also, in November, there were many debt offers by Debt Management Office (DMO) including Sukuk.”

The apex bank had announced a Naira redesign policy to produce new notes for three of the naira denominations in circulation: N200, N500, and N1,000 notes.