Despite investors’ sentiment trading and the uncertainty surrounding the 2023 general elections, anticipation of dividend payouts and sectoral performance of the NGX bank index lifted stock‑market capitalisation by N1.08 trillion in January. In 2022, the market recorded foreign‑investor apathy due to scarce foreign exchange, double‑digit inflation, and a hike in the Monetary Policy Rate to 16.5 percent. By the close of trading on 31 January 2023, the market capitalisation of all listed stocks on the Nigerian Exchange stood at N28.998 trillion, up from N27.915 trillion at the end of 2022.
The NGX All‑Share Index rose by 3.88 percent, reaching 53,238.67 points, an increase of 1,987.61 basis points from the 51,251.06 points recorded in 2022. This gain was driven by strong performances across several sectoral indices. The NGX Banking Index appreciated by 7.5 percent to 448.85 points, up from 417.50 points in the previous year. The NGX Insurance Index rose 5.4 percent to 183.71 points, while the NGX Consumer Goods Index closed at 622.15 points, up 5.64 percent from 588.93 points. The NGX Oil & Gas Index also increased by 5.4 percent, reaching 487.51 points from 462.48 points in 2022.
Capital‑market analysts noted that sentiment trading, fueled by expectations of dividend payments, contributed to the 2.74 percent growth observed in the month under review. Ayotunde Alabi, Head of Capital Markets and Treasury at Dash, explained that “the anticipation of dividend payouts by companies has many investors trying to partake in the dividends that will be distributed during the first quarter. Some investors also see the market as a prime opportunity for bargain hunting, believing the right time to buy is when there are sellers, allowing them to profit when the market stabilises.”
David Adnori, Vice President of Highcap Securities Limited, echoed this view, stating that “the anticipation of end‑of‑year dividend distribution lifted the stock market in January 2023.” Analysts at Investment One, in their report “2022 Review and 2023 Macro‑Economic and Financial Market Outlook,” argued that market direction would be largely determined by the interplay of fixed‑income yields, monetary policy, corporate actions, and election outcomes. They added that “with tepid movement in yields and expectations of a less aggressive hawkish tone from the CBN, negative real returns should remain relatively high in the fixed‑income space, giving alpha‑seeking investors room to divert more funds to equities, which remain a solid channel for positive real returns.”
Comments are closed for this story.