- NGX closed 2023 positively, driving optimism for a robust 2024 primary market due to increased investor confidence and recent leadership appointments.
- Market operators foresee a focus on the primary equities market in 2024, expecting more listings and manufacturers seeking capital after market reforms.
- Financial experts anticipate a positive market in 2024, despite macroeconomic challenges, citing confidence in private capital-based developmental projects and the leadership transition at NGX.
The Nigerian Exchange Limited (NGX) closed 2023 on a high note, fueled by renewed investor confidence in listed companies.
This positive momentum has market operators brimming with optimism for a bullish and active primary market in 2024.
This optimism is further bolstered by the recent appointment of Mr. Temi Popoola as the GMD/CEO designate of the Nigerian Exchange Group Plc (NGX Group) and Mr. Jude Chiemeka as the Acting CEO of NGX, effective January 1, 2024, subject to regulatory approval.
The market operators who spoke with Narametrics exclusively predicted that the primary market for equities may take centre stage in 2024 as several manufacturers whose balance sheets were wounded by the market reforms are also likely to access the Capital Market for funds in 2024.
They also believe that the market is going to see more public companies get listed on the stock exchange to raise new capital.
They noted that the orderly transition that led to the appointment of the new leadership was a welcome development that will further boost market confidence.
Expectations of financial experts
Tajudeen Olayinka, CEO, of Wyoming Capital and Partners in an exclusive interview with Nairametrics noted that 2024 will be a positive year for the Nigerian stock market.
He noted that his confidence could be drawn from the 2024 budget proposal of President Bola Ahmed Tinubu, where total reliance has been placed on the use of private capital in funding some important developmental projects across the country.
- “In a way, we are going to see more public companies get listed on the stock exchange to raise new capital, while the existing listed companies will not be left behind in this positive development.
- So, I see a very bullish and active primary market in 2024, even though, there could be occasional moderation in price movement across the board, as investors take profit and engage in portfolio rebalancing.
- The fact that the private sector will take the lead in navigating the economy out of its prolonged state of disequilibrium, we will see a better capital market in 2024,” he said.
Olayinka said the new leadership at NGX Group Plc and its subsidiary Trading Platform, NGX Exchange Limited, will further promote investors’ confidence, as the development is a product of a smooth and orderly transition, orchestrated by a good succession plan.
“Interestingly, the Chairman of the Board of NGX Group Plc and its new GMD, as well as the MD/CEO of NGX Exchange Limited are well-trained professional stockbrokers. This is a positive development for the market,” he said.
Executive Vice Chairman, of Hicap Securities Limited, Mr. David Adonri Highcap also in an exclusive chat with Nairametrics said the macroeconomic situation remained depressing with galloping inflation which rose from 21.5% in January 2023 to 28.2% in November 2023.
Adonri noted that the GDP growth rate fell short of expectation ending Q3 with 2.54%.
He added that following market reforms, the Naira depreciated from N449.05/$1.00 in January 2023 to N802/$1.00 in December at I&E Window.
Adonri stated that the macroeconomic situation is expected to improve in 2024 as the economy readjusts to a new price level.
He noted that the commencement of domestic refining of crude oil is expected to have a salutary effect on forex and petroleum product prices.
- “Monetary policy is expected to focus on price stability.
- If CBN carries out the policy of recapitalization of banks in 2023, then the primary market for equities may take centre stage in 2024. Several manufacturers whose balance sheets were wounded by the market reforms are also likely to access the Capital Market for funds in 2024,” he said.
The Commodities ecosystem is likely to be very active in 2024 if current military action against bandits, terrorists, and insurgents is pursued with undiminished intensity.
The appointment of new leadership from within to steer the management of NGX is a welcome move for the continuity and sustenance of the development program they have been part of.
Temi Popoola and Jude Chiamaka who are incoming GCEO and CEO respectively are tested and trusted professionals with multidisciplinary pedigree and experience to capably take the market to the next level. Under them, the future outlook for the Capital Market is very bright.
Shareholders expectations
The President of the New Dimension Shareholders Association, Mr. Patrick Ajudua said going by the fact that the capital market is a barometer used in measuring the economic viability of any nation, shareholders’ expectations for the new year are as follows:
- Need for govt to address the floating of the Naira, which has led to foreign exchange losses for most companies in the capital market leading to a loss position of their bottom line.
- We have seen how nine firms lose up to N960 billion to forex policy in half-year report this year
- Need to provide a conducive business environment to foreign investors to stop the delisting wave we have seen this year. A situation where we have up to $7 billion outstanding remittance owed by the government to investors doesn’t create confidence for stakeholders and thereby makes it difficult for business growth.
- Need to address issues of insecurity in the country. Investment can only grow in an atmosphere of secure and conducive business environment. Insecurity drives away investors and we can attain our desired growth of a $1 trillion economy when we can’t guarantee minimum security.
- Need to curtail the rising tide of inflation, which stood at 28.2% in November. This affects business growth, resulting in a high cost of borrowing and doing business.
- Address the issue of double taxation which has significantly affected companies’ profitability.
- Need to provide more incentives to companies in the capital market such as reduction in import tariffs, tax holidays, accessibility to foreign exchange, adjusted electricity tariff, and lower interest rates.
Ajudua noted that the shareholder expects that the coming online of 1st indigenous private refinery & resuscitation of Port Harcourt will result in an inflow of dollars and stability of the exchange rate.
He noted that they are optimistic that if the government carried out the above suggestion, the market would begin to yield more positive results making the foreign investors return to the country.
- “As we anticipated likely drop in inflation, stability of exchange rate resulting in more inflow of dollars, we expect that government will clear all outstanding dollar remittance of investors which is put at $7 billion.
- We also expect that investors will deepen their position in securities that offer higher yields and returns on capital appreciation. this is the sequel to the stimulation of business environment via recapitalization of banking and insurance industry, merger & acquisition of banks and anticipated energy sector reform aimed at increasing capacity and infrastructural growth,” he said.
The National Co-ordinator of the Independent Shareholders Association of Nigeria, (ISAN) Mr. Moses Ibrude in an exclusive chat with Nairametrics said that the market has done well and that shareholders’ expectations for 2024 are that the performance will be sustained.
According to him, this is because the market is expecting a lot of activities due to the proposed bank recapitalisation and many rights issues in the pipeline.
Ibrude appealed to the government to provide enabling business policies and strategies to improve the economic environment in general and the capital market in particular.
- “I am also advising the new sheriff in town to put on their thinking caps to implement the right strategies that will promote good corporate governance and business ethics that will bring confidence which will encourage companies to come to the market,” he said.
What you should know
The NGX Exchange recorded a year-on-year increase of 45.90%, marking the fourth consecutive annual gain as it closed at 74,773.77 index points.
Concurrently, the market capitalization experienced a noteworthy uptick of N13 trillion year-on-year, concluding at N40.92 trillion.
The positive market sentiment observed among investors can be attributed to various factors, with a key influence being the favourable policies implemented by President Bola Tinubu’s administration.
These policies encompass the removal of fuel subsidies, the rationalization of exchange rates, and the floating of the naira.
Investors strategically positioned themselves, capitalizing on the recent record earnings posted by quoted firms.
