Investors in Nigerian equities have gained N4.48 trillion in share price appreciation over the past eight months.

It (gain) ranks as one of the highest returns in a global economy ravaged by energy and commodity crises.

The benchmark indices at the Nigerian stock market yesterday closed with average year-to-date return of 16.67 per cent, equivalent to net capital gains of N4.48 trillion for the eight-month period.

The benchmark showed nearly one-fifth growth in investor’s portfolio over the past eight months.

The market, however, moderated last month with a net loss of about N28.3 billion as investors realigned their portfolios ahead of the third quarter earnings season.

The All Share Index (ASI) – the value-based index that tracks all share prices at the Nigerian Exchange (NGX) closed yesterday at 49,836.51 points as against its 2022’s opening index of 22.297 points, representing average increase of 16.67 per cent.

Aggregate market value of all quoted equities rose from the year’s opening value of N22.297 trillion to close yesterday at N26.88 trillion, an increase of N4.58 trillion. However, the difference between the increase in market capitalisation and ASI was due to new primary listings or addition of new shares during the period.

The overall market capitalisation of listed equities had closed in July at N27.163 trillion while the ASI depreciated by 1.06 per cent from 50,370.25 points recorded in July.

The eight-month average return is nearly three percentage points ahead of Central Bank of Nigeria (CBN)’s Monetary Policy Rate (MPR) of 14 per cent but same points below the current inflation rate of 19.64 per cent.

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The segmental analysis showed mixed performance across the sectors as follows:

• The banking index rose by 2.4 per cent to close at 387.41 points from 378.21basis points posted at the beginning of the month;
• The insurance index added 7.9 per cent to close at 180.23 points from 167.04 points it closed for trading in July. On the negative side;
• The industrial goods index recorded the highest decline of 13.8 per cent to 1,777.14 points from 2,062.30 points it opened for trading.
• The oil and gas index depreciated by 4.3 per cent to 532.15 basis points from 556.28 basis points it opened for trading in August.

Vice President, Highcap Securities Limited, Mr. David Adonri, noted that decline performance crept into the stock market when the Monetary Policy Committee (MPC) of CBN raised interest rate to 14 per cent.

He noted that other macroeconomic indicators such as inflation rate and foreign exchange (forex) scarcity have also diminished demand for stocks as investors moved to fixed income markets.

He added that the fundamentals of foreign and domestic macroeconomic indicators in three months have impacted negatively on the stock market.

He projected that the market might remain bearish ths month “with current happening in global and domestic economy.

“The Russia-Ukraine war is one of them and the current happening in China as regarding power blackout is causing global anxiety among investors.

“People are afraid that it can cause recession in China and it can increase global inflation and Nigeria is vulnerable to such.

“We have 2023 general election that politicians are commencing campaign from September and we are already experiencing foreign currency scarcity.

“We are for a serious challenge in the stock market going forward in 2022,”

PAC Holdings’ Investment analyst Wole Adeyeye said some investors migrated from stock market to fixed-income market to take advantage of high yields triggered by recent hike in MPR.

He added that foreign investors were avoiding the Nigerian stock market due to the upcoming general elections, weak local currency and insecurity in the country.

He noted that the trend may likely continue in September as yield in the fixed-income market is expected to remain attractive.

Adeleye said: “This trend may likely continue in September because rates in the fixed-income market are expected to remain relatively high. In addition, foreign investors may not patronise the Nigerian equities market at the moment due to the uncertainty surrounding the economy.

“Nevertheless, our medium-long term outlook for the Nigerian equities market remains positive. This provides an opportunity for investors that want to take advantage of cheap stocks in the market at the moment.”