Nigerian Stock Market up N24.66trn in 16 years, Down 55% in Dollars

…as new sector leaders emerge

The Nigerian Stock Market measured by the NGX ASI index has surpassed the margin lending crisis level of 2008 as the composition of the market in terms of sectors has changed significantly in the past fifteen years, according to a new report by Chapel Hill Denham Limited.

According to the report, the market has recovered significantly to N37.03 trillion in 2023, from N12.64 trillion in 2008, but highlighted that it has dwindled in dollar terms to $48.24 billion from $107.21 billion.

Analysts at Chapel Hill Denham stated that the 55 percent decline in foreign currency terms stems from severe episodes of Naira devaluation as the country’s external reserves has been under pressure due to a precipitous slump in crude oil price.

The NGX ASI that hit 66,490.23 points as of August 2023 outshined 66,371.20 level reached as of March 05, 2008 as stock market performance were driven by margin lending by banks to investors which resulted in market bubbles as valuations went through the roof and that marked the beginning of the financial crisis of 2008.

It is interesting to note that the NGX ASI index has crossed the 100,000 point mark as at March 02, 2024, valued at N58.53 trillion it has a year to date (YTD) return of 38.45 percent. That means the market has gained N44.66 trillion since 2008, according to MoneyCentral calculations.

There has been a monster rally since June 05, 2023 when the newly elected president Bola Ahmed Tinubu announced some bold market friendly reforms such as the removal of subsidy on fuel while the central bank unified the exchange rate to spur foreign investment.

Of course, the market dynamics has changed post the financial crisis as there has been new listings of bellwether firms that have been adding impetus to the overall market performance.

“The composition of the market has changed remarkably with the emergence of new sectors and new listings on the Exchange,” said analysts Chapel Hill Denham.“The industrial sector has the highest market cap sector and is the largest with the market cap accounting for 28 percent for 28 percent, followed by telecom sector at 27 percent while banking now controls 16 percent of the market cap.”

Get More of our proprietary news and analysis as MoneyCentral is now on WhatsApp Channels  Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!