Despite investor pessimism trading and uncertainties surrounding the 2023 general elections, expectation of dividend distribution and sectoral performance of the NGX bank index increased stock market capitalization by N1.08 trillion in January.
Due to a lack of foreign money, double-digit inflation, and an increase in the Monetary Policy Rate to 16.5 percent, the stock market in 2022 saw international investor disinterest.
The market capitalization of all listed stocks on the Nigerian Exchange finished trading on January 31, 2023, at N28.998 trillion, a rise of N1.08 trillion from the N27.915 trillion it closed trading at in 2022.
Also, the NGX All-Share Index increased by 3.88 percent or 1,987.61 basis points to 53,238.67 basis points, up from 51,251.06 basis points when it closed for trade in 2022.
This performance was bolstered by the NGX Banking Index, which grew 7.5% to 448.85 basis points as of January 31, 2023, from 417.50 basis points the previous year, and the NGX Insurance Index, which rose 5.4% to 183.71 basis points as of January 31, 2023, from 174.36 basis points the previous year.
The NGX Consumer Goods Index finished January 31, 2023, at 622.15 basis points, up 5.64 percent from 588.93 basis points in 2022, while the NGX Oil & Gas Index increased 5.4% to 487.51 basis points from 462.48 basis points in 2022.
Capital market analysts said the market so far in 2023, had witnessed sentiment trading by investors, stressing that anticipated dividend payment contributed to the 2.74 per cent growth in the month under review.
The Head, Capital Markets and Treasury at Dash, Ayotunde Alabi, said the anticipation for dividends payout and bargain hunting drove the market performance.
He said, “The anticipation of dividend payouts by companies. Most investors are trying to partake in the dividends that the companies are going to payout during the first quarter.
“And some other investors believed the market has sold to that point where they can tap into supreme bargain hunting.
“They feel the right time to buy is when there are sellers in the market so that they can make more money when everything settles down.”
On his part, the Vice president of Highcap Securities Limited, Mr David Adnori said the anticipation for end-of-the-year dividend distribution lifted the stock market in January 2023.
“The performance of the stock market in January is driven by shareholders’ expectation for the end of the year earnings and distribution of dividends,” he said.
Analysts at Investment One in a report titled, “2022 review and 2023 macro-economic and financial market outlook” said the direction of market performance would be largely determined by the trio impact of fixed income yields in tandem with monetary policy, corporate actions, and election turnouts.
“Ditto to our outlook of tepid movement in yields in the fixed income space and expectations of a less aggressive hawkish tone from the CBN, negative real returns should remain relatively high in the fixed income space giving room for alpha-seeking investors diverting more funds to equities as it remains a solid channel for positive real returns.”
