Nigeria Stock Market Offers One Of Africa’s Best Returns At 39.84% Despite Economic Challenges

In the first quarter of 2024, the Nigeria stock market witnessed an surge, offering investors a 39.84 percent year-to-date gain.

Despite facing hurdles like rising insecurity and double-digit inflation rates, the market showcased resilience, outperforming many other exchanges across the continent of Africa.

According to available data, the Nigeria stock market All-Share Index (ASI) soared from 74,773.77 basis points at the year’s onset to an impressive 104,562.06 basis points by the end of March. This remarkable growth was attributed to increased buying interest, particularly in sectors like industrial goods, financial services, and consumer goods.

Mr. David Adnori, Vice President of Highcap Securities Limited, commented on the market’s performance, noting, “Investors traded based on sentiment, especially with the emergence of Tinubu as president. There’s confidence in his ability to revitalize the economy and implement investor-friendly policies.”

The upbeat sentiment was further buoyed by expectations surrounding the banking sector recapitalization and anticipated corporate earnings for the first quarter of 2024.

Despite concerns over the recent Monetary Policy Rate (MPR) hike to 24.75 percent, market experts highlighted investors’ inclination towards equities as a hedge against inflation. Mr. Tajudeen Olayinka, an investment banker and stockbroker, emphasized the surplus liquidity in the economy, stating, “There’s excess liquidity chasing fewer profitable investment opportunities.”

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However, the economic landscape isn’t without its challenges. Governor Olayemi Cardoso of the Central Bank of Nigeria (CBN) addressed the Monetary Policy Committee’s stance, acknowledging the need to balance output growth with inflationary pressures. He emphasized the committee’s commitment to curbing rising inflation.

Despite these challenges, the Nigeria stock market robust performance underscores investor confidence in the country’s economic prospects. With ongoing reforms and strategic policies, the market remains an attractive destination for both local investors and foreign investors.