NGX Market Cap Soars by N1.8 Trillion in July on Impressive Earnings

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The Nigerian Exchange Limited (NGX) closed the month of July 2023 on a highly positive note, with the market capitalization gaining a staggering N1.814 trillion. The remarkable increase was largely attributed to the impressive earnings and dividend declarations from listed companies, boosting investor confidence in the equities market.

In addition to strong corporate performances, insider dealings among companies’ directors and related parties also contributed to the market’s growth. Such transactions showcased the investors’ belief in the inherent value of these companies. The ongoing reforms by President Bola Tinubu further reinforced positive sentiments and encouraged investment in the market.

Despite facing some challenges like profit-taking, selloffs, and foreign exchange pressures, the benchmark NGX All-Share index displayed remarkable resilience. It opened the trading month at 60,968.27 points and closed at 64,337.52 points, representing an impressive 5.53% growth. Year-to-date (YTD) close registered an astounding 25% increase during the month under review.

The surge in market capitalization, which reflects the listed value of equities, rose by N1.814 trillion, reaching N35.011 trillion from N33.197 trillion. This substantial gain was primarily driven by better-than-expected corporate earnings, higher dividend payouts, and improved liquidity. As fixed income yields faced instability due to soaring inflation, investors turned to the equity space, supporting buying interests in the market and attracting funds into equities.

The trading activities on the floor of the Exchange also experienced notable volume, with a total turnover of 2.854 billion shares worth N37.645 billion in 41,547 deals traded in the last week of July. The mixed sentiment and high trading volume during the month reflected the interests of majority shareholders and institutional investors seeking to hedge against inflation and capitalize on the mixed outlook for fixed income rates and yields.

Analysts anticipate that the positive momentum will likely continue, driven by the better-than-expected Q2 performance of some quoted companies, surpassing the inflation rate and raising expectations for robust earnings at the end of the financial year. They believe that this positive earnings trend and possible interim dividend declarations from companies will spur increased bargain-hunting activities in the market.

While profit-taking activities on stocks that have experienced significant appreciation may be possible, analysts at Cordros Research expect investor sentiments to be influenced by macroeconomic developments and yield movements in the fixed-income market in the medium term.

Overall, the NGX’s impressive performance in July underscores the market’s resilience and attractiveness, fueling optimism for sustained growth in the coming months.

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