Emmanuel Ochayi
The Nigerian stock market has recorded a 31.34% Year-to-Date (YtD) growth as of December 6, 2024, placing it among Africa’s top four performing exchanges. This growth comes despite economic challenges like inflation and forex instability.
According to a recent market analysis, Nigeria’s performance trails behind Ghana, Malawi, and Zambia, with the Ghana Stock Exchange Composite Index (GSE-CI) leading at 51.38% YtD growth. The Malawi Stock Exchange followed at 48.86%, while the Lusaka Securities Exchange recorded a 46.16% increase.
Join our WhatsApp ChannelExplaining the market’s success, a stock analyst, Mr. John Eze, said, “The Nigerian stock market’s growth is primarily driven by foreign investors’ increased participation and strong corporate earnings from the banking sector. The Central Bank’s recapitalisation policy also played a significant role in boosting investor confidence.”
What is Driving Nigeria’s Stock Market Growth?
Analysts have pointed to several factors driving the growth of the Nigerian stock market in 2024. Chief among them is the inflow of foreign investment, which has seen a 156% increase in 2024 compared to 2023. The Central Bank of Nigeria’s (CBN) policy reforms, especially in the foreign exchange (FX) market, have played a significant role in attracting foreign capital.
The CBN governor, Mr. Olayemi Cardoso, explained the rationale for the reforms, saying, “The considerations of the meeting were held in the backdrop of renewed inflationary pressures as the headline, food, and core measures rose year-on-year in October 2024. Members, therefore, agreed unanimously to remain focused on addressing price developments.”
The FX reforms, which aim to ensure transparency and stability, have helped boost investor confidence. Additionally, CBN’s increase of the Monetary Policy Rate (MPR) to 27.5% from 18.75% has contributed to tighter control of inflation, which stood at 33.88% as of October 2024.
How the Stock Market Benefited from New Listings
Another key contributor to the growth of Nigeria’s stock market is the listing of new firms, including Transcorp Power Plc and Aradel Holdings, which have market capitalisation values of N2.7 trillion and N2.25 trillion, respectively.
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According to Mr. Bayo Akin, an equity strategist, these new listings have significantly boosted the total market capitalisation, which now stands at N59.107 trillion. He remarked, “The listing of Transcorp Power and Aradel Holdings has injected fresh life into the market, providing investors with more opportunities for diversification and profit.”
This development has also increased the value of key stocks such as Airtel Africa Plc, Dangote Cement Plc, Seplat Energy Plc, and Guaranty Trust Holding Company Plc.
Stock Market Outlook for 2024
Despite the 31.34% YtD growth, analysts predict that the Nigerian stock market may not surpass its 2023 performance. Economic pressures, particularly inflation and currency fluctuations, could slow down growth in the final quarter of the year.
However, analysts remain cautiously optimistic. Mr. John Eze stated, “While inflationary pressures remain a threat, the measures taken by the CBN, especially its recapitalisation drive and reforms, could sustain positive momentum in 2024.”
As of now, Nigeria remains one of Africa’s best-performing stock exchanges, with strong prospects for the future.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
