Nigerian Equities Market Records Worst Return in Africa

The Nigerian Exchange Limited All-Share Index posted the worst gains among African stock markets at -2.53 percent year-to-date as of September 7, according to African Markets, a provider of financial market data, news, analysis, and research with a focus on Africa.

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According to the data obtained from also from the website showed that among 17 stock exchanges across Africa tracked by the index, the NGX posted the lowest returns YTD, followed by the Botswana Stock Exchange Domestic Companies Index at -1.93 percent.

The Rwandan Stock Exchange ASI also saw negative returns as it depreciated by 0.82 percent YTD. On the positive side, the Zimbabwean ASI jumped by 150.38 percent YTD, posting the highest gains on the continent while the Ghana SE Composite Index followed at 42.10 percent.

However, looking at the chart by year-on-year returns, the NGX ASI saw the second-highest appreciation as it rose by 53.30 percent, coming second to the Zimbabwean SE ASI at 340.16 percent. The Ghana SE Composite was third highest with a 49.94 percent gain while the Botswana SE Domestic Companies Index recorded the highest negative losses at -4.27 percent.

Mr. Olaide Baanu, a research analyst at Atlas Portfolios Limited, noted that Nigeria has experienced a recession last year was very lucky to exit the recession in the third quarter of 2020.

He explained that based on what other countries experienced around the world, Nigeria was able to cushion the effects of the pandemic with the financial sector contributing more to the Gross Domestic Product.

He said, “The financial sector on the NGX too performed quite well during the second half of the year. The financial services providers are some of the most capitalised stocks on the NGX; so they were partly responsible for the positive movement in the market.

“Companies like Total Nigeria Plc (now Total Energies Marketing Plc), Seplat Energies Plc, and Nestle Nigeria Plc also saw good returns on equity. Industrial firms like Dangote Cement Plc and Lafarge Africa Plc saw gains too and posted positive financials. Telcos like MTN and Airtel Africa Plc benefited from the digital boom of last year as their data revenues rose which fueled investor confidence in their fundamentals.

Managing Director at Credent Investment Managers, Mr. Ibrahim Shelleng, said, “The rebound in the equities market last year was as a result of low yields in the fixed income and money markets.

“At some point, treasury bills were in the negative territory and investors moved to the equities market to improve returns.” He said foreign investors that were unable to exit due to forex illiquidity entered the equities space to improve their yields.

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With the rebound in fixed income yields, he added, investors had shifted back to secure yields to reduce the volatility the stock market brought. With the rebound in fixed income yields, he added, investors had shifted back to secure yields to reduce the volatility the stock market brought.