By Africa Links 24
Published on 2024-01-26 07:10:50
The Nigeria Stock Exchange (NGX) has been experiencing substantial gains driven by cement giants and banks, pushing the main index past the psychologically significant threshold of 100,000 index points for the first time. At the end of trading on January 25, the main index reached an all-time high of 120,149.93 index points, making it the best-performing stock market globally this month with a 36.37% return.
Currently, there are more than a dozen listed companies on the NGX with a valuation of N1 trillion (about $13 billion) or more. These companies include Airtel Africa, BUA Cement, Dangote Cement, FBN Holdings, MTN Nigeria, BUA Foods, Seplat, GT, Zenith, UBA, and Geregu. Together, these companies account for over two-thirds of the NGX market valuation.
Dangote Cement, Nigeria’s most valuable company, surpassed N10 trillion in market valuation, becoming the country’s first business to achieve this milestone. This achievement is attributed in part to the recent purchase of Dangote Cement shares by fellow businessman Femi Otedola. BUA conglomerate, controlled by Abdul Samad Rabiu, also has a market valuation of at least N10 trillion.
The recent market rally is attributed in part to investors’ “fear of missing out” and interest from new domestic investors. Top-performing companies such as Dangote Cement, BUA Cement, BUA Foods, and Seplat Energy have seen significant year-to-date returns ranging from 26.5% to 95.3%.
Data from the NGX shows substantial growth in the institutional composition of the domestic market, indicating increased interest from both retail and institutional investors. This growth has already exceeded the total gain recorded last year, and it is only January.
The Nigerian equity market has outperformed all peers in the Africa region, Europe, and the Middle East so far this year. Banking stocks, in particular, have gained significant traction, potentially stemming from a pending banking sector recapitalization.
Looking ahead, the commencement of operations at the Dangote oil refinery is expected to further boost sentiments for the mid and downstream oil and gas sector. However, issues such as inflation and fuel price rigidity persist and will require government commitment to implementing reforms in order to determine the market’s future course in 2024.
