Nigerian equities market performed best in Africa in Q1: 2024 –Report
The Nigerian equities market recorded a strong performance in the first six months of 2024 with the All Share Index accelerating up 33.81% H1 2024 (versus 18.96% in H1:23), with resultant N15.68 trillion gains by equity investors, a report by the Cowry Asset Management Group has revealed.
Mr. Johnson Chukwu, founder/CEO of Cowry Asset Management Group, made this submission while presenting a report of the first half of 2024 at a webinar in Lagos.
According to the report, “The NGX was the best-performing stock exchange in Africa during H1 ’24. This surpassed other African markets like Casablanca and Johannesburg. The growth significantly outperformed major global indices like the NASDAQ (18.13%) and NYSE (6.96%) in the same period.
The gains were buoyed by a confluence of factors, including robust corporate earnings, dividend declarations, government-led market reforms, and a heightened interest from both domestic and foreign investors.”
Specifically, the report noted that, “The positive market sentiment witnessed in H1 2024 cut across diverse sectoral indices, with substantial gains witnessed in the Industrial (+73.14% YTD), consumer goods (+41.05% YTD), Oil & Gas (+38.12% YTD), and Insurance (+21.42% YTD) sectors respectively. However, the banking sector with a loss of -7.47% was the lone laggard on the back of recapitalization pronouncements by the Central Bank of Nigeria (CBN).
The yield environment in H1 2024 strongly favoured money market and bond market instruments given the effective yields of between 18% – 26% on government instruments, which are considered as risk-free.
To circumvent the high lending costs occasioned by the current yield environment, we foresee increased corporate issuance of Commercial Papers among small to mid-sized companies in coming months at very attractive yield (circa 30%), giving investors with high-risk appetite better returns.”
Chukwu, however, advised investors to be more circumspect in their choice of investment instruments particularly Commercial Papers as we believe that some of the issuers may not have the liquidity to redeem these instruments at maturity.