Nigerian Equity Market Thrives Amidst Political Shifts, Economic Reforms In 2023

The Nigerian equity market has defied historical trends, maintaining a bullish trajectory throughout 2023 despite the backdrop of political uncertainties stemming from the general elections.

Tunde Amolegbe, Managing Director of Arthur Stevens Asset Management Limited, emphasized this break from convention, stating, “For the elections in 2023, the market broke from the conventional trend.”

The market’s bullish stance post-election was attributed to local investors’ optimism about the incoming administration’s policies. “The perception that whoever wins the election will be good for the market,” fueled positive sentiment, said Amolegbe.

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President Bola Tinubu’s administration brought about economic reforms, including the removal of fuel subsidies and forex harmonization. These policy changes led to shifts in market dynamics. Tinubu declared, “The fuel subsidy is gone,” redirecting funds to infrastructure and ensuring a unified exchange rate.

However, as macroeconomic conditions challenged businesses, several multinational corporations announced plans to exit the Nigerian market. Notable departures included Procter & Gamble, while Jumia and Bolt ceased operations in Nigeria.

In contrast, amidst exits, new listings like the VFD Group and the National Infrastructure Debt Fund contributed to market capitalization. Lamido Yuguda, Director General of the Securities and Exchange Commission, highlighted the evolving market landscape, stating, “Companies driving the market are not exiting but coming in.”

Analysts project a decline in inflation and foresee increased investor interest in securities offering higher yields. The dominance of local investors might persist, and potential listings including Dangote Foods and NNPC could shape the market in 2024.

Luke Ofojebe of Vetiva Capital Management emphasized the impact of US Federal Reserve actions on the naira’s value.

Ofojebe stressed the need for the government to solidify forex receipts, especially through increased oil production, to attract foreign investors and strengthen the naira’s value.

In summary, the Nigerian equity market navigated through a year marked by political transitions, economic reforms, multinational exits, and new listings, demonstrating resilience in the face of challenges while preparing for potential shifts in the coming year.