January 3, 2022/CSL Research
The Nigerian equities market closed the year 2022 positive as the NGX All Share Index gained +19.98% y/y to close the year at 51,251.06 compared with 42,716.44 as of December 31, 2021. This was amid the lingering ripple effects of Russia’s invasion of Ukraine on 24 February 2022 which triggered a disruption in global supply chain, thereby fuelling global inflation. Crude oil
and agricultural commodities (cereals, vegetable oil, sugar, meat, etc) were all impacted, hence energy, transport and food inflation remained high for most part of the year. In Nigeria, inflation remained consistently upbeat, rising to 21.47% in November (17-year high). In response, monetary policies were hawkish across the globe. The Central Bank of Nigeria consistently increased the Monetary Policy Rate (MPR) from 11.5% in January 2022 to 16.5% in November 2022.
Also, the local currency saw depreciatory pressure as supply of the US dollar decreased considerably amid low crude oil production resulting in higher operating costs for businesses, particularly the import dependent manufacturers. Consequently, investors were more apathetic. Foreign portfolio inflows ebbed as fund managers sought safer havens. However, corporate actions from many blue-chip companies provided some respite as some investors, particularly the local institutional investors, took positions. Local institutional investors accounted for 55.51% of total equities transaction while local retail and foreign portfolio investors accounted for 27.82% and 16.67% respectively as at November 2022. Nestle, Dangcem, Total, Guinness, Okomu, Presco, Seplat, MTN, Airtel, Stanbic, Zenith, GTB and BUA CEM led the pack in dividend declarations.
On a sectoral basis, Oil & Gas gained the most (+34.05%) buoyed by share price gains of Seplat (+53.85%), Ardova (+30.38%), Conoil (+20%) and MRS (+18.88%). Beyond the expectation of corporate earnings on the back of increase in the price of crude oil, Seplat’s dual listing on NGX Exchange and London Stock Exchange endeared it to foreign portfolio managers as it created arbitrage opportunity and a way for Foreign Portfolio Investors (FPIs)
to take funds out of Nigeria without waiting on the CBN. The industrial sector followed with +19.67% gain supported by +31.25% gain on the share prices of BUACEM but moderated by declines in the share prices of Dangcem (-1.13%) and Wapco (-4.38%). The Banking sector closed +2.81% higher while Insurance and Consumer sectors declined by -11.99% and -0.06% respectively.
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