Spotlighting performance of Nigeria’s equities market in one year

The Nigerian equities market has had a rollercoaster ride over the past year, experiencing mixed sentiments driven by various factors such as the removal of petrol subsidy, liquidity, investor positioning, high rates in the short-term fixed-income space, and naira depreciation among others. Patrick Ejumedia, the Head of Research at Sterling Asset Management and Trustees Ltd, sheds light on the market performance and provides insights into the trajectory of growth, performance of different market indices, and the top gainers and losers in the market. The market has seen fluctuations in the all-share index, with highs of over 100,000 points before moderating to around 98,000 points. A significant factor contributing to the market's growth was the removal of fuel subsidy, which boosted investor confidence and attracted foreign portfolio investments (FPI). Additionally, the shift in interest rates in the short-term fixed income space also influenced investor behavior, with rates increasing from 7% to about 26.69% for a one-year NTB. These factors have contributed to the current state of the market. Despite challenges such as exchange rate depreciation and high inflation affecting certain sectors like consumer goods, the market has seen some positive performances in indices like consumer goods and industrial goods, driven by sectors such as cement due to infrastructure projects. The financial and service sectors have shown resilience, with many top gainers hailing from these industries. While some firms in the industrial and consumer goods sectors have struggled, the overall performance of the market paints a mixed picture. Looking ahead, uncertainties in the operating environment, FX losses, recapitalization exercises, and the MPC's hawkish stance pose challenges for the market's future. The stability of the Naira and inflation remain key concerns for the CBN, with potential implications on interest rates. While optimism exists for economic moderation and currency stability, the need for effective policy measures to address speculative activities in the market is crucial. Overall, the market's journey over the past year reflects a complex interplay of economic factors and investor sentiment, signaling both challenges and opportunities for the future.