The Nigerian Exchange Limited (NGX) ended the first month of the year (January) in the black, with the NGX All-Share Index increasing by 3.88% to close the final trading day with 53,238.67 index points.
Despite rising inflation, interest rate hikes, and a redesigned naira, equity investors increased their buying pressures in anticipation of impressive full-year 2022 corporate earnings results.
The market’s performance
According to data obtained by EntrepreneurNG, the All-Share Index began the trading year on January 4, 2023, with a value of 51,251.06 indexes. It then finished the month at 53.238.67, up 1,987.61 basis points or 3.88%.
Further investigation revealed that activities on the Nigerian Exchange Limited (NGX), which began the trading year with a market capitalization of N27.915 trillion, closed on January 31st, 2023 with a market capitalization of N28.997 trillion, earning a year-to-date gain of approximately N1.082 trillion.
Market analysts believed that the renewed sentiment in the local bourse market had grown as a result of a desire to increase capital gains on the back of low stock prices caused by disruptions in the financial market caused by unstable policies and the buildup to the 2023 general elections.
Price reduction
During a conversation with Nairmetrics, Mr. Mike Eze, Managing Director of Crane Securities Limited, stated that the market’s current price adjustment mechanism will continue during the first quarter of 2023. He also stated that it will make the market more appealing.
Mr. Eze explained that most results, particularly banking results, would be released in the first quarter, and that dividend investors would swoop on the stocks.
He added that it is likely that investors will be able to reap the dividends declared by these companies during the quarter.
Political ramifications
He added that politics will have an impact on stock prices because politicians and institutional investors who may be sponsors of elective positions will sell early in January to raise funds for their campaigns.
Some astute investors are waiting to seize this opportunity.
International investors
Eze also predicted that panic sales by foreign investors would occur, with the majority of them selling and fleeing to their home countries due to election jitters.
But if the elections are conducted on a free and fair basis, stability will return after the election and these investors will embrace the market again, he said.
Full-year results expectation
Meanwhile, Analysts at Cordros Securities Limited said that they continue to expect investors to position for 2022 full-year results ahead of upbeat corporate earnings and re-investment of dividends to drive bullish sentiments in Q1, 2023.
Nevertheless, in the latter part of the year, we believe that market sentiments will be shaped by a combination of the outcome of the 2023 elections, market-friendly policy or reforms, the direction of monetary policy, and impact on fixed income yields, sector-specific events and the weak macroeconomic environment, they said.
