Nigeria Stock Market 18.9% in H1, highest in 15 years

Nigeria Stock Market 18.9% in H1, highest in 15 years

Nigerian stock exchange

The Nigerian stock market experienced a remarkable surge in the first half of 2023, with the Nigerian Exchange Limited (NGX) All-Share Index rising by 18.9%. This gain represents the highest level the market has reached in 15 years since March 2008. Despite concerns over rising inflation, interest rate hikes, and the fallout from the 2023 general elections, investor confidence remained strong, leading to increased buying activity.

Several factors contributed to the positive sentiment among investors. The peaceful transition of power after the elections and favorable policies introduced by President Bola Tinubu’s administration, such as the removal of fuel subsidies and the streamlining of exchange rates, were major drivers of the stock market rally. Additionally, the suspension of Central Bank Governor Godwin Emefiele, who had implemented restrictive policies affecting profits, was viewed positively by investors.

Furthermore, a demographic shift has occurred in the Nigerian stock market, with more local institutions and retail investors participating compared to foreign portfolio investors. This shift reduced volatility in stock prices as locals had more faith in the market. Expectations of foreign investment inflows due to the introduced policies and the anticipation of short-term increases in inflation also played a role in the market rally.

The emergence of Bola Tinubu as the President of Nigeria brought stability to the market and increased demand for stocks. Market-friendly policies, such as exchange rate harmonization and the removal of fuel subsidies, attracted foreign and high-net-worth local investors. The ongoing earning season also contributed to the stock market’s positive sentiment, with investors anticipating substantial returns on investment from dividends.

Investors in the Nigerian stock market are optimistic about the prospect for a yield environment, and the current political uncertainties have not deterred their confidence in the market’s future performance. As a result, the stock market defied challenges and enjoyed a strong rally in the first half of 2023.

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