Analysis of BusinessDay trends reveals that among investors holding long positions in eight major African stock markets, Egypt, Nigeria, and Ghana have yielded the highest returns since 2014, each exceeding 100 percent cumulatively. The eight markets tracked include: Côte d’Ivoire (BRVM-CI), Nigeria (NGX-ASI), Egypt (EGX-30), South Africa (JSE-ASI), Morocco (MASI), Kenya (NSE-ASI), Ghana (GSE-CI), and Botswana (BSE-DCI).
Egypt's stock market exhibited the most substantial cumulative return over the past decade, achieving a 351 percent increase. Nigeria followed with a 147 percent return, and Ghana with a 121 percent return. Other notable African markets, and their performance from 2014 to 2023, include South Africa (+85 percent), Morocco (+62 percent), Côte d’Ivoire (+19 percent), and Botswana (+11 percent). Conversely, Kenya experienced a cumulative decline of 12 percent during this period.
Temi Popoola, CEO of the Nigerian Exchange Group, stated to BusinessDay that, “Nigeria’s capital market has consistently emerged as a center of resilience and innovation, providing attractive opportunities for investors. The sustained outperformance of our blue-chip companies over the last ten years has been a vital factor in driving market returns. These companies, which form the backbone of the market index, have demonstrated significant growth and resilience, even amid challenging economic conditions.”
He further elaborated, “High inflation has influenced investment strategies, leading to equities being favored as a hedge. Consequently, share prices have frequently adjusted in response to inflationary pressures, safeguarding investor value. Moreover, enhanced regulatory frameworks, particularly after the 2008 financial crisis, have strengthened market integrity and boosted investor confidence.”
Popoola also highlighted that the introduction of several strategic new listings has stimulated activity in the secondary market.
“When paired with macroeconomic reforms, these listings have heightened the appeal of naira-denominated assets to international investors. Finally, the post-COVID era has seen reduced yields in fixed-income markets, driving greater interest in equities and fueling robust market performance over the years,” the NGX CEO noted.
The NGX Group expressed optimism regarding the market's positive trajectory, attributing it to the effects of targeted macroeconomic and sectoral reforms. The recovery of companies that adeptly navigated the challenges posed by currency devaluation has reignited investor interest and fostered renewed confidence, which are crucial drivers of the market in 2024.
Significantly, reforms in essential sectors such as oil and gas have proven to be transformative. The elimination of subsidies and the liberalization of exchange rates have not only improved operational efficiency but have also enhanced the overall performance of publicly listed companies within this sector. These policy adjustments have had a profound impact on market dynamics, generating a ripple effect of growth and opportunity.
Looking ahead to 2025, we expect that a stable macroeconomic environment, coupled with the ongoing implementation of these strategic reforms, will help maintain this positive momentum. Our outlook is optimistic, anticipating increased liquidity, bolstered investor confidence, and sustainable growth throughout the market. These factors will be crucial in sustaining the upward trend and delivering value to all market participants, as noted by Popoola.
As of December 20, Nigeria's stock market has experienced a year-to-date increase of 35.25 percent, according to data reviewed by BusinessDay. Additionally, market data indicates that Côte d’Ivoire's stock market has risen by 28.11 percent this year, while Egypt's market has seen a 22.63 percent increase, and South Africa's market is up by 9.85 percent.
Other markets and their year-to-date returns include Morocco (+21.76 percent), Kenya (+31.73 percent), Ghana (+53.65 percent), and Botswana (+12.54 percent).
The Nigerian equities market has recently maintained its upward trajectory, bolstered by robust buying interest in the insurance, consumer goods, and banking sectors.
This strong performance at the Nigerian stock exchange is indicative of ongoing investor confidence, according to analysts.
As of Friday, December 20, the NGX All-Share Index (NGX-ASI) surpassed the 100,000-point threshold, reaching 101,129.09 points.
Additionally, market capitalization has increased to N61.30 trillion, driven by new listings, a recapitalization initiative among banks, and favorable trading conditions, alongside attractive yields in the fixed income market.
Recently, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) raised the benchmark interest rate, known as the Monetary Policy Rate (MPR), from 27.25 percent to 27.50 percent.
While analysts anticipated a potential bearish trend in Nigeria’s equities market as fixed income-focused investors capitalized on high yields, the market has instead seen continued bullish activity. Investors remain motivated to seek out bargains, recognizing significant mid- to long-term opportunities within the equities market.
The positive performance at the Nigerian stock exchange is further evidence of sustained investor confidence.
“Current bullish trends are closely linked to favorable economic indicators from recent weeks, including an eighth consecutive trade surplus of N5.81 trillion in Q3 2024, enhanced capital inflows, and a rise in foreign reserves,” noted Futureview analysts in their report dated December 20.
“Analysts predict that the market will continue its upward trend, supported by a stable foreign exchange environment, high yields in fixed income, and strong buying interest in the banking, insurance, and oil and gas sectors as the Santa Claus rally approaches,” Futureview analysts added.
Nigeria's inflation rate increased to 34.60 percent in November 2024, up from 33.88 percent in October 2024. This marks the third consecutive month of rising inflation, reaching a level not seen in nearly 30 years. The rise is largely due to ongoing low food production, the devaluation of the naira, and multiple increases in petrol prices, all of which have intensified the cost-of-living crisis.
Market analysts observed a three-month period of growth following a two-month period of moderation in July and August 2024. Despite persistent inflationary pressures, the Nigerian stock market has shown sustained positive performance, and the foreign exchange market has demonstrated relative stability, underpinned by robust market confidence and ongoing reforms aimed at enhancing transparency and investor confidence.
The Central Bank of Nigeria's strategic interventions, including the implementation of an electronic foreign exchange matching system and the increase in diaspora remittances, have been instrumental in achieving this stability.