Investors Gain N15.6 Trillion in H1’24 Amid Monetary Policy Tightening

Despite economic challenges, investors on the Nigerian Exchange Limited (NGX) gained over N15.6 trillion in the first half of 2024 (H1’24), largely due to the forex market reforms introduced by the Central Bank of Nigeria (CBN).

Market Performance Highlights:

• Market Capitalization: Rose to N56.601 trillion at the end of H1’24 from N40.917 trillion at the end of December 2023.
• NGX All Share Index (ASI): Increased to 100,057.49 points from 74,773.77 points over the same period.
• Year-to-Date (YtD) Return: Stands at an impressive 33.81%, despite recent bearish trends in Q2.

Quarterly Performance Breakdown:

• Q1 2024: The equities market saw a significant return of 39.84%, driven by:
  • Strong company earnings.
  • Positive dividend announcements.
  • The listing of Transcorp Power Plc on the NGX, which added 7.5 billion shares at N240.00 per share to the market.
  Positive sentiment during this quarter was also attributed to favorable policies by President Bola Tinubu’s administration, such as the removal of fuel subsidies, streamlining of exchange rates, and the floating of the naira.
• Q2 2024: The market experienced a decline, with returns falling to -4.31% by the end of June 28th. This downturn was primarily due to:
  • Increased monetary tightening by the CBN.
  • Rising interest rates, which made fixed income investments more attractive than equities.

Analysts’ Insights:

Financial analysts emphasized the positive impact of CBN’s FX reforms, which have bolstered market confidence and attracted foreign investors.

InvestData Consulting Analysts:
“Fiscal and monetary policies are striving to return the nation’s economy to a recovery path, despite the continued mismatch of policies and implementation styles. Ahead of the half-year earnings season, more companies like UCAP, AccessCorp, MTNN, and UACN have informed the market of their closed period and board meetings to approve the Q2 earnings report. Investors should target companies with a consistent track record of dividend payments, strong fundamentals, and growth prospects that support further earnings growth.”

Olatunde Amolegbe, Former President, Chartered Institute of Stockbrokers (CIS):
“The CBN’s reform of the FX market has increased confidence among foreign investors, boosting the market alongside support from local institutional investors.”

The insights from these analysts suggest that despite the economic headwinds and policy challenges, the NGX has managed to provide substantial returns to investors, underpinned by strategic reforms and positive investor sentiment.