February 1, 2023

Capital gains in stocks decline 44.6% to N1.1trn

Nigerian Stock Exchange

By Nkiruka Nnorom

ACTIVITIES in the stock market weakened at the end January, 2023 as the capital gains recorded by investors fell by 44.6 percentage points to N1.083 trillion from N1.956 trillion at the end of December 2022., indicating that concerns around the upcoming February general election may have started to take a toll on the market. However, the market capitalisation closed positive at N28.998 trillion, yesterday, up 3.9 percent from N27.915 trillion recorded at end of December 2022. The decline in capital gains was despite the anticipation of impressive financial results and dividend payment by the investors.  It also contradicted investment analysts’ positions.

 According to the analysts, “The usual January momentum is likely to dominate particularly as the yield environment appears to be shifting downwards.”  The benchmark All Share Index (ASI) rose by 3.9 percent to close at N53,238.67 points from 51,251.06 points.

Sectoral analysis showed that the performance of the market was driven by activities in the oil & gas, industrial and the banking sectors. Specifically, the oil & gas sector led the sectoral performance, rising by 41.3 percent, followed by the industrial goods sector, which advanced by 22.23 percent.

The banking and the consumer goods sectors followed, advancing by 10.54 percent and 5.6 percent respectively, while the insurance sectors emerged the lone loser, posting a 7.3 percent decline. In his projection for the 2023 trading activities, Vice Chairman/ CEO of Highcap Securities Limited, Mr David Adonri, said that despite the gloomy predictions for the global economy, positive internal factors can make equities surpass 2022 performance in 2023. 

He said that if the general election in 2023 is credible and security improves, the leverage from commencement of domestic oil refining can remarkably improve macroeconomic conditions.  

This, he said, would strengthen the fundamentals of the capital market such that decline in interest rate will become feasible.  

“Fate of the capital market is intertwined with macroeconomic conditions. If the new administration can restore security, formulate appropriate policies to ginger the productive economy and re-set monetary policies, especially as it concerns a single exchange rate, investors’ confidence will be greatly enhanced,” he said.