In a significant turn of events, the Nigerian stock market witnessed a substantial appreciation of N13 trillion in 2023, reflecting a 46.6% increase from its 2022 closing figure. The boost is attributed to successful reforms initiated by President Bola Tinubu, who assumed office earlier in the year.
President Tinubu’s announcement of fuel subsidy removal and the unification of foreign exchange rates played pivotal roles in instilling confidence among investors, particularly in fundamental stocks. The market capitalization closed the year at N40.918 trillion, marking an impressive surge.
The Nigerian Exchange Limited All-Share Index (NGX ASI) reached an all-time high of 74,773.77 basis points, registering a remarkable Year-to-Date (YtD) gain of 45.90% from its opening point at 51,251.06 basis points. New listings, including MeCure Industries Plc, VFD Group, Nigeria Infrastructure Debt Fund (NIDF), and Africa Plus Partners, contributed to the positive trajectory.
Key stock market indices reflected the overall positive trend in 2023. The NGX Banking Index gained 114.90%, reaching 897.20 basis points, while the NGX Oil & Gas Index rose by 125.54% to 1,043.06 basis points. The NGX Industrial Goods Index also saw an increase of 12.86% to 2,712.27 basis points.
The CEO of Wyoming Capital and Partners, Mr. Tajudeen Olayinka, described the market in 2023 as “eventful and bullish.” He credited the market’s confidence to the pro-market stance of leading presidential candidates, including President Tinubu, which became evident in November 2022.
Olayinka predicted a positive momentum for the Nigerian stock market in 2024, citing President Tinubu’s budget proposal that emphasizes the use of private capital for crucial developmental projects.
Managing Director of ARM Securities Limited, Rotimi Olubi, highlighted the resilience of the Nigerian equities market in 2023 despite global downgrades and macroeconomic challenges. Reforms, such as FX liberalization and petrol subsidy removal, contributed to substantial gains, particularly in the Banking and Oil and Gas sectors.
Looking ahead to 2024, Olubi anticipated the market’s positive trajectory to persist, with investors favorably positioning themselves in dividend-paying stocks. Concerns were raised about the potential removal of selected Nigerian securities from the MSCI Frontier Markets Indexes, which could trigger sell-offs and affect foreign investment.
Meanwhile, Nigeria’s external reserves hit a six-year low of $32.87 billion at the end of December, driven by the Central Bank of Nigeria’s efforts to support the naira. The naira faced challenges throughout 2023, losing over 50% of its value and becoming the third worst-performing global currency. The CBN’s actions led to a reduction in foreign exchange reserves, emphasizing the need for policy measures to stabilize the currency.