Sandra Smith
Thu, Sep 7, 2023 3:15 PM

Nigerian Stock Market Emerges as Second Best-performing Exchange in Africa in Q2 2023

BusinessEarn Max 30 Coins💰 Get coins immediately after reading this article

Nigerian Stock Market Emerges as Second Best-performing Exchange in Africa in Q2 2023
The Nigerian Exchange Limited (NGX) has been ranked as the second best-performing exchange in Africa in the second quarter of 2023. Despite concerns about inflation and weak macroeconomic conditions, the Nigerian stock market has remained strong, attracting investors' confidence. The bullish trend can be attributed to favorable policies introduced by President Bola Tinubu's administration and the recent formation of the country's economic cabinet. Analysts anticipate a broadly favorable market in the second half of 2023, projecting strong earnings performance for listed Nigerian corporates.

Lagos - The Nigerian Exchange Limited (NGX) has emerged as the second best-performing exchange in Africa in the second quarter of 2023, according to data from African markets. Despite concerns about soaring inflation, interest rate hikes, and weak macroeconomic indices, Nigeria's stock market has remained strong, bolstering investors' confidence.

The Ghana Stock Exchange secured the top spot with a growth rate of 22.84%, while the NGX achieved an impressive growth rate of 19.33%, placing it second on the list. The Malawi stock exchange followed closely behind with a growth rate of 15.79%.

This significant development has propelled the Nigerian stock market to a 15-year high, reflecting strong positive sentiment among investors. The market capitalization of listed equities opened the trading month of August at N35.011 trillion and closed at N36.422 trillion, gaining N1.41 trillion within the month.

The All-Share Index (ASI), which measures the performance of Nigerian stocks, began trading at 64,337.52 index points on August 3, 2023, and closed the month at 66,548.99 points on August 31, representing a gain of 2,211.47 basis points or 3.44%.

The impressive performance of the Nigerian stock market can be attributed to several factors. Investors are actively pursuing low, medium, and high-capitalized stocks across various sectors in response to favorable policies introduced by President Bola Tinubu's administration. These policies include the removal of fuel subsidies and the unification of the exchange rate, creating a favorable investment climate.

Furthermore, investors are capitalizing on the record earnings recently posted by listed firms, in addition to the formation of the country's economic cabinet. These factors have contributed to bolstering investors' confidence and interest in Nigerian corporates.

In their H1 2023 review and H2 2023 outlook report, analysts at United Capital identified two key factors that have historically suppressed the development of the real sector - elevated interest rates and foreign exchange losses. However, they anticipate a positive earnings performance for listed Nigerian corporates in H2 2023, thanks to new administration policies such as the unification of the exchange rate and advocacy for a lower interest rate environment.

The expectation of a broadly favorable market for the equities market in H2 2023 is further supported by the new administration's objective to dampen the interest rates environment. This will incentivize the Central Bank of Nigeria (CBN) to maintain a mostly liquid financial system to stimulate activities in the real sector.

Market analysts have noted that despite prevailing macroeconomic uncertainties, most investors, particularly domestic investors, remain optimistic about the Nigerian economy's prospects. Their optimism is underpinned by the resilience and impressive performance of the stock market.

Cordros Research, in their market review and outlook titled "Veering from the Watershed Point," highlighted the equities market's resilience and investor optimism for domestic growth due to the new administration's policy reforms. The implementation of these reforms, coupled with accommodative monetary policy and robust corporate earnings, has supported buying activities throughout August.

While foreign investors may remain cautious as long as FX illiquidity issues persist, Cordros Research projects a positive return of 25.8% for the Nigerian stock market in the full year of 2023.

The robust performance of the Nigerian stock market in Q2 2023 underscores the immense investment opportunities available in the country. With supportive policies and a thriving corporate sector, the Nigerian stock market continues to attract both local and foreign investors.

Source of content: OOO News 2023-09-07 News

More detailed, more comprehensive, fresher news, please visit OOO NEWS.

Share content to earn coins