Banking stocks boost market capitalization as the  historic N40tn Cap exceeded

NIGERIA, Dec 21 – The Nigerian Exchange Limited (NGX) market capitalization  exceed the N40tn mark at the close of Wednesday’s trading  following increased activity in banking stocks.

Accordingly,  the All-Share Index (ASI), which is the benchmark index of the exchange, exceed 73,000 basis points days after hitting 72,000 points.

Interestingly, both the market cap and the ASI at the close of trading on Wednesday stood at N40.164tn and 73,397.71 respectively, representing a 1.28 %  increase. The main drivers of the day’s market were the stocks of GTCO, AccessCorp, Transcorp, FCMB and United Bank for Africa.

Wednesday’s value of trade skyrocketed by 84.62 % to close at N12.829bn. Likewise, the volume of traded units also pushed upward. It increased by 34.88 % to 554.64 million units and the number of deals stood at 7,910 at the close of trading.

This remarkable feet came 10 months after the market cap hit N30tn on the back of the interest of domestic investors. On February 27, the first trading day after the presidential polls, the market pushed above the N30tn market.

While speaking with The PUNCH, capital market stakeholders expressed hope about the capability of the market to do even more.

In response to the remarkable crossing, the Managing Director of Arthur Stevens Asset Management Limited, Tunde Amolegbe, stated that the market was betting on the reforms done by the current administration.

“The stock market is a forward-pricing market meaning that it tends to adjust for consequences of policy ahead of their impact being felt on the ground. So, while the populace is feeling the immediate negative impact of various policies, the market is betting that the result of those same policies will be positive for the economy in the medium to long run which is why we are seeing the bullish sentiments we’ve witnessed so far. We must also recognize that the market can correct sharply if this does not turn out to be the case.

“Secondly, we must also recognize that increasing inflation rate and the impending banking recapitalization programme are empirically positive in terms of accretion to the stock market even if they are negative to Main Street as it were,” He said.

While on his part on this historic crossing, an economy and capital market analyst, Rotimi Fakayejo, projected that it will even go higher.

“It is going to go up more. We are still looking at the ASI hitting 75,000 before the year runs out. There are good expectations for the 2023 year-end results of listed companies, especially of the banks. Some of the banking stocks have appreciated in the year, some reaching all-time highs.

“We have not seen movements yet in the industrial, consumer and telecoms sectors, which make up a high percentage of the market cap, we are expecting improved returns. Dangote Cement, BUA Cement, Airtel, and Nestle will still do better in the market. Looking at all of these, the ASI cannot close lower than 75,000 basis points. Irrespective of the economic situation, the performance of the market in 2023 will be nothing compared to 2024. The foreign investors will begin to have confidence in the market and when they bring in their funds, there will be a boom in the market,” Fakayejo said.

Details of activities on the floor of the NGX shows that the gainers’ chart was led by Transcorp, Multiverse, Infinity Trust Mortgage Bank, ETranZact and Caverton which gained 10 %, 10 %, 9.97 %, 9.73 % and 9.66 % respectively.

However, the losers’ chart was led by  Tantalizers Plc, Thomas Wyatt, The Initiates Plc, Juli Plc and Chams Plc, which lost 10 %, 9.86 %, 9.32 %, 9.23 % and 9.05 % respectively.

Experts believes that, if this trend is sustained the market will likely do better in 2024, which will likely translate into a better economy for the country.