The Nigerian stock market in 2024 witnessed growth trajectory, despite the nation’s economic headwinds. In this report AMAKA IFEAKANDU looks at some factors that contributed to its outstanding performance within the year.
The Nigerian stock market has defiled the nation’s economic challenges experienced in 2024, closing the year in a remarkable growth profile.
The NGX All Share Index posted growth of 28157.67 basis points or 37.65 per cent to close the year at 102926.40 points from 74773.73 points it opened in January 2024.
The market capitalization which opened with N40.917 trillion appreciated by N21.846 trillion or 53.39 per cent to close the year at N62.763 trillion.
The market within the year under review reflected a mix of highs and lows , as the equities market passed through periods of strong growth and temporary corrections.
Quarterly performance
An analysis of the transactions during the year showed that the local equity market saw a significant 39.84 per cent growth in first quarter 2024, rising from 74,773.77 to 104,562.06. The NGX market capitalization increased from N40.917 trillion in January 2024 to N59.487 trillion in the first quarter, representing 44.49 per cent.
The market took negative direction in the second quarter of the year ending June, dropping by N2.519 trillion or 4.26 per cent to close at N56.691 trillion from N59.120 trillion it opened in the begining of April 2023.
In the same vein, the NGX ASI depreciated by 4504.57 basis points or 4.31 per cent to 100057.49 points from the level traded the preceding quarter.
In the third quarter, the market sustained negative growth, dropping by N34 billion, indicating a drop of 0.06 per cent to close at N56.635 trillion from N56.601 trillion it opened for the quarter while ASI also went down by 1498.70 basis points to 98558.79 points from 100057.47 points it opened for the quarter.
The low performance in the second and third quarters were as a result of economic headwinds, including persistently high inflation, a weakening naira, and a newly introduced windfall tax that affected the banking sector.
The policy decisions by the Central Bank of Nigeria, such as a recapitalization plan requiring commercial banks to raise fresh capital over two years to meet their capital base , and a high-interest rate environment,
shifted investor focus from equity market to fixed-income securities, thereby affecting stocks performance within the period.
The market rebounded in the fourth quarter, posting a 5.56 per cent gain to close at 102926.40 points from 97506.87 it opened for the quarter thereby strengthen investors confidence. The positive sentiment was driven by new listings, recapitalization efforts, and strategic initiatives by listed companies.
Factors that drive the equity market
Several factors contributed to the exceptional performance of the domestic equities market in 2024. A major contributor was the increase in new listings and fund raising activities facilitated by the Nigerian Exchange Limited (NGX), which saw an impressive N8.1 trillion worth of shares listed between January and November. This inflow of capital was driven by 20 companies, including 10 financial institutions and two breweries, seeking to expand and strengthen their financial positions.
In the banking sector, the Central Bank of Nigeria’s (CBN) revised capital requirements—mandating N500 billion for internationally authorized banks and N200 billion for national banks, among others—pushed financial institutions to raise capital through various avenues such as public offers, rights issues, private placements, and listings by introduction. These strategic moves positioned banks to meet regulatory thresholds while enhancing their growth potential.
The brewery sector also played a pivotal role, with Nigerian Breweries Plc and International Breweries Plc leveraging equity markets to reduce debt exposure and enhance financial flexibility. These measures not only bolstered their balance sheets but also positioned the companies for sustained business expansion.
Major listings further boosted market momentum. Aradel Holdings Plc reposition itself in the market with the introduction of N3.05 trillion worth of shares, while Transcorp Power Plc added N1.8 trillion to the Exchange through its listing. Also, Haldane McCall Plc contributed with the introduction of 3.12 billion shares valued at N11.99 trillion These substantial additions to the exchange not only elevated market capitalization but also encourage investor interest and confidence in the market’s potential.
The federal government policy reform also played a major role in shaping the market’s success. The favorable regulatory environment created a supportive backup for market activities, attracting both domestic and foreign investments. These reforms shows the government’s commitment to fostering economic stability and growth, as well solidifying the equities market’s resilience in a challenging economic environment.