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Nigerian Equities Market Gains Global Eminence Again

Growth in the equities market has been driven by domestic retail and institutional investors targeting Nigerian companies with strong fundamentals.

Players in the Nigerian equities market appear to be riding the waves of the market rally with investors gaining N55.2bn on Tuesday, 01 December 2020. This saw market capitalisation rise to N18.4tn while Year-to-Date (YTD) return improved to 30.9%, making the Nigerian equities market the 2nd and 3rd best performing market in the world in local currency terms and US Dollar terms, respectively, according to Bloomberg.

Growth in the equities market has been driven by domestic retail and institutional investors targeting Nigerian companies with strong fundamentals, expecting that they will weather the storm of the COVID-19 pandemic and be able to distribute dividends to shareholders. The total value of transactions executed by domestic investors on The Nigerian Stock Exchange (NSE or The Exchange) stood at N825.94Bn in the first nine months of 2020. It is also evident that the equities market continues to respond positively to macroeconomic policy changes such as the cut in Monetary Policy Rate (MPR) by 100 basis points from 12.5% to 11.5% by the Central Bank of Nigeria (CBN) in September 2020.

Ultimately, there is immense value to be reaped for the Nigerian capital market even in the face of current realities.

The Exchange has remained resilient even in the face of the COVID-19 pandemic. It would be recalled that on Thursday, 12 November 2020, the NSE All Share Index (ASI) posted its largest daily gain in more than five years. The ASI rose beyond the set threshold of 5%, triggering a 30-minute trading halt of all stocks for the first time since the circuit breaker was introduced in 2016.

What is also noteworthy is that as multi-asset Exchange hub, The Exchange continues to recognize opportunities in the alternative investment asset space and is working assiduously with stakeholders to deepen market activity across these asset class. In the fixed income space, capitalization has risen to N17.7Tn from N12.9Tn as at the end of 2019 as a result of increased listing activity from the Federal Government and Nigerian corporates.

The Exchange Traded Fund (ETF) segment of the market continues to enjoy investors’ attention with the NewGold ETF returning 78.36% YTD, the Vetiva S&P Nigeria Sovereign Bond ETF returning 45.93% YTD, the Lotus Halal Equity ETF returning 43.99% YTD, and the Vetiva Industrial ETF returning 55.79% YTD. In September 2020, The Exchange listed two new ETFs from Meristem Wealth Management Limited – Meristem Growth (MERGROWTH) and Meristem Value (MERVAL) ETFs which are expected to further attract market activity.

Ultimately, there is immense value to be reaped for the Nigerian capital market even in the face of current realities. Investors are, therefore, encouraged to take advantage of the dynamism of the capital market by seeking out profitable investment opportunities across available asset classes.  

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