Despite the rising inflation and interest rate hike, the nation’s equities market finished the year 2022 on a bullish run as the NGX All-Share Index appreciated by 19.98% to close the final trading day of the year on 30 December 2022 with 51.251.06 index points.
The Nigerian stock market ended the year 2022 on an impressive note, as investors increased their buying pressure, especially on blue-chip stocks.
Stocks had gone on a monthly losing streak after posting negative returns every month from June to October 2022. After getting to a record low in October, having suffered a massive price correction on Airtel in the month of October, positive sentiments had returned to the local bourse as investors rebalance their portfolio ahead of the year’s end.
A difficult start: A hike in the Monetary Policy Rate (MPR) to 15.5% also saw investors in the stock market react negatively which led to the aggressive movement of investors to the fixed-income market.
- Foreign investors had during the period also sold off Nigerian stocks with fear created by the build–up to 2023 general election tensions.
- With limited foreign investor participation and a lack of interest from retail investors, it appeared.
- Stocks posted losses for 5 months straight in the second half of the year before recovering in November and December with 8.72% and 7.5% gains respectively.
- In contrast, stocks lost only in March and June in the first half of the year.
- Earlier gains in the months of January (+9.1%) and gains in February, April and May helped boost year-end gains.
Market performance: Available statistics to the Nairametrics showed that the All-Share Index, which is the broad index that measures the performance of Nigerian stocks opened the trading year at 42.716.44 index point at the beginning of trading on January 4, 2022, closed the year at 51.251.06 points, gaining 8,534.64 basis points or 19.98%.
- NGX Oil and Gas was the best performer gaining 34.60%, followed by NGX Industrial with a gain of +19.67%.
- The NSE 30 Index which comprises the most capitalised stocks ended the year with a single-digit return of 6.98%.
- The banking and insurance index reported 2.81% and -11.99% respectively depicting the challenges of the financial services sector.
- However, the pension index did well during the year with a return of 10.37%.
Further analysis revealed that activities on the Nigerian Exchange Limited (NGX) which opened the trading year at N22.296 trillion in market capitalisation at the beginning of trading on January 4, 2022, closed on December 3oth 2022 at N27.915 trillion, hence has earned a year to date gain of about N5.619 trillion.
Wema Bank Best Stock: Despite the paltry returns of the Banking sector index, Wema Bank led the chart as the best-performing Nigerian stock in the year 2022 posting a return of 441.67%.
- Penny Stock Champion Breweries came second with a 134% return while PZ Cussons, Guinness, and Fidelity Bank came third, fourth, fifth, and sixth respectively.
- On the loser’s side was Honeywell with a 31% loss at year-end. Nestle, Beta Glass and Custodian, and Allied also joined as worst stocks for 2022.
BUA, Geregu boosted market value: The growth of market capitalisation was boosted by the listing of BUA Foods Plc and Geregu Power Plc during the period under review.
- A total of 18 billion ordinary shares of BUA Foods were listed at N40.00 per share under the Consumer Goods sector of NGX, with the trading symbol, BUAFOODS at the beginning of the year.
- The listing of the shares added N720,000,000,000 to the market capitalization of NGX, further boosting liquidity in the Nigerian capital market and providing opportunities for wealth creation.
NGX CEO, Mr. Temi Popoola speaking on the development at the closing of the Gong ceremony to mark this year’s trading noted that it was an impressive year for the exchange despite facing global macroeconomic challenges and volatility.
- “It’s been a fantastic year for NGX, with a positive 19.98% return,” said Popoola. “We’ve also seen several landmark listings in equity and fixed income, including BUA Foods and Geregu Power, which have played a key role in driving growth in the market this year.”
4th best performing in the world: Mr. Oluwole Ololade Adeosun, President and Chairman of Council, Chartered Institute of Stockbrokers said the Nigerian equity market in particular was rated the 4th best performing in the world in terms of return on investment.
- “It is noteworthy that 2022 marked the 30th anniversary of the establishment of the Chartered Institute of Stockbrokers, the bona fide training and certifying body of the Nigerian capital market. It also saw the nation’s foremost securities exchange, release its first annual result as a demutualized exchange, recording a 26% growth in PAT.”
- “The primary market was boosted with the first GenCo to be listed on the NGX Main Board, Geregu Power, and this should open up the door to others in the sector to get listed,” he said.”
Strategic steps: He noted that apart from the numbers, the market also took some important strategic steps to move the market closer to the highest global standards and ensure a prosperous future for the market and investors.
“The Nigeria Exchange Limited (NGX) launched the first exchange–traded derivatives (ETD) market in West Africa, with Equity Index Futures Contracts. We also witnessed the launch of the first Central Counterparty (CCP) Services (CCP) in West Africa, by way of NG Clearing which will facilitate the clearing and settlement of exchange-traded derivatives and commodities traded. Equally important is the African Exchanges Linkage Project (AELP) which has gone live on integrating African capital markets by facilitating cross-border trading and free movement of investments in the continent,” he said.
Volatility: Mr. Sam Onukwue , Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON) said that despite global volatility, the Nigerian Exchange Limited (NGX) maintained its positive momentum in the first nine months of 2022, gaining N4.15 trillion to outshine global markets that have witnessed severe volatility.
- “The market capitalisation of the NGX had opened in 2022 at N22.297 trillion, gaining N4.15 trillion or 18.63 per cent to close at N26.451trillion as of September 30, 2022. The Nigerian All Share Index closed the first half of 2022 with a gain of about 21.17% year to date (YTD) making it one of the best-performing stock markets in the world.”
- “However, investors in the Nigerian stock market have witnessed double-digit inflation, scarcity of foreign exchange, uncertainty in global economies, and of course, a hike in the Monetary Policy Rate (MPR) to 15.5 per cent. Investors in the stock market reacted to Central Bank of Nigeria’s (CBN) hike in MPR, leading to the aggressive movement of investors to the fixed income market that comes with low-risk investment and modest yield.”
- “Investors reacted sharply to three quick successions in MPR hike, beginning with 13 per cent in May, 14 per cent in July, and 15.5 per cent in September. September 2022 was quite spectacular because investors exercised extreme caution by holding back further investment in equity, in reaction to the aggressive rise in inflation (20.52 per cent) in the month of August, 2022. This decline was due to the continued rise in fixed income rates due to the persistent hike in MPR,” he said.”
