By Chinwendu Obienyi
Despite negative sentiments that dominated global markets in recent times, investors in quoted securities on the Nigerian Exchange Limited (NGX) gained a total of N5.64 trillion at the end of the first half (H1) of 2022.
Specifically, the market which opened the year with a capitalisation of N22.296 trillion and and ALLShare Index at 42,716.14 points, closed the half-year of June 30, 2022 at N27.935 trillion capitalisation and Index at 51.817.59 points.
This meant that the market’s year-to-date (YTD) rose by 21.31 per cent or N5.64 trillion, the highest performance in 14 years. According to data obtained from the NGX, local and foreign investors traded N485.4 billion worth of equities in the second quarter (Q2) of 2022.
That represents an increase of 40.11 per cent when compared to N346.43 billion traded in the first quarter (Q1) of 2022.
Furthermore, the data revealed that the growth in value of equities market traded also reflected in volume as it gained 143.83 per cent to 54.27 billion in Q2, 2022 from 22.26 billion reported in Q1 2022, while deals on the bourse rose by 8.5 per cent to 320,778 in Q2 2022 from 295,533 reported by the NGX for Q1 2022.
According to market analysts, the gain was as a result of investors’ cravings to increase capital gain due to the low price of some quoted securities arising from the widespread of the pandemic and sharp drop in oil price.
Also, the listing of BUA Foods’ shares also added N720 billion to the market capitalization of NGX during the first month of the year, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.
Daily Sun analysis revealed that the performance of major counters of the market remained mixed.
For instance, with the rise in global oil prices, the NGX Oil & Gas Index outperformed other indices on the bourse, gaining 58.06 per cent to 545.34 basis points in H1 from 345.01 basis points it opened trading.
It was closely followed by the Industrial Index that rose 7.7 per cent to 2,152.24 basis points from 2,008.30 basis points it closed in 2021. However, the NGX Banking Index suffered a decline of 2.04 per cent in H1 to 397.79 basis points as of June 30, 2022 from the 406.07 per cent it opened for trading, just as the NGX Insurance Index depreciated by 9.98 per cent to 178.33 basis points in H1 2022 from 198.11 basis points it opened for trading this year.
Reacting to the H1 2022 performance of the market, analysts at Cordros Securities, in its 2022 Mid-year outlook report titled; Heightened Uncertainties Amid Great Policy Unwind | Financial markets review and outlook, said that with the dominance of domestic investors in the market, the nation’s bourse was immune to the string of negative events which dampened emerging markets risk assets in H1 2022.
The analysts in their H2 outlook noted that the performance of the market will largely depend on the intertwining impact of yield elevation in the fixed income market and increasing uncertainties as Nigeria gravitates towards the election cycle in 2023.
“The reasons for the equities’ market resilience are rooted in the exodus from the market due to FX liquidity issues. This situation also limited inflows from investors and resulted in the market being dominated by domestic investors and foreign investors’ inability to repatriate funds, leading to the reinvestment of dividends in the market.
We expect market performance to be far more resilient than in other pre-election years when market performance was pressured as investors’ consternation rose. Considering all the issues, our baseline expectation is that the market will remain resilient in H2-22, and the return will settle at +27 per cent by the end of the year”, they stated.