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Friday, September 22, 2023

Eight Nigerians Own 32.18% of Stock Market Capitalisation

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By Patrick Atuanya.

The stock market rally has been underpinned by market-friendly policies announced by President Ahmed Tinubu and expectation of bumper dividend by bellwether firms.

But the stock market ownership is extremely concentrated because of the growing gap in Nigeria where over 50 percent of a population of 200 million live on less than $1.98 a day.

Eight investors who are either chief executive officers (CEO) or chairmen of through direct and indirect holdings in their companies have a combined market value of N10.56 trillion as of June 29, 2023, which is 32.18 percent of the total market capitalisation of N32.70 trillion, according to MoneyCentral calculations.

The market value of Tony Elumelu, Chairman Heirs Holdings, Transcorp, and founder of Tony Elumelu foundation, stood at N31.12 billion; Herbert Wiwge, CEO of Access Bank Plc, (N27.38 billion); Jim Ovia, Chairman and founder of Zenith Bank Plc, (N172.38 billion); Billionaire investor Femi Otedola, (N750.46 billion); Africa’s second richest man, Aliko Dangote (N4.02 trillion), and Abdul Samad, the founder and chairman of BUA Group, (N5.33 trillion).

The growing wealth gap via ownership of financial assets is somewhat not surprising as the middle class has disappeared due to deteriorating consumer purchasing power, high utility bills, and unemployment.

In short, the majority of people are trying to survive the scorching headwinds and owning stock is the least of their worries.

The annual inflation rate in Nigeria rose for the fourth month to a near 18-year high of 22.41 percent in May 2023, up from 22.22 percent in the prior month and matching market estimates.

The jobless rate in Nigeria rose to 33.3 percent in the three months through December 2021, according to a report published by National Bureau of Statistics (NBS). That’s up from 27.1 percent in the second quarter of 2020, the last period for which the agency released labor-force statistics.

Even at that, lack of awareness about the benefits of financial assets especially among the young generation means that less than 1 percent will continue to own more than a quarter of stocks held by Nigerian households.

Indeed, the richer are getting richer, while the poor are getting poorer as the share of equities owned by wealthiest households is poised to rise given the recent rally in the equity market.

The year to date (YTD) returns have improved to 17.10 percent as market capitalisation advanced from N421.12 billion to N32.70 trillion.

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