January 4, 2022/FBNQuest
Today, we take a look at the 2022 performance of the Nigerian Stock Exchange (NGX) relative to the two other stock exchanges that we track in sub-Saharan Africa. The Lagos bourse delivered a positive return of +20% in 2022, thanks to a stellar H1 ’22 and positive performance in the final two months of the year. The NGX’s 2022 performance compares with returns of -0.9% and -11.9% for Johannesburg (Joburg – JALSH), and Nairobi (NSE 20) stock exchanges respectively. On a m/m basis, the NGX also outperformed its peers on the continent, delivering a m/m return of 7.5% in Dec ’22, compared with the +2.4% and -2.4% performance by the Nairobi and Joburg stock exchanges respectively.
Performances were broadly positive for most sectors. However, the top performing sectors were the telecoms, palm oil, and oil and gas sectors which delivered average returns of 44.7%, 36.4%, and 20.3% respectively in 2022.
The fast-moving consumer goods, and the banks delivered average gains of 13.5% and 5.9% respectively, underperforming the NGX’s 20.0% return.
In terms of sector-specific drivers, a key factor behind the stellar performance of the telecoms sector was offshore investor interest in Airtel Africa due to its dual-listed status. The solid earnings results by MTN Nigeria also helped.
The palm oil sector names benefitted from a rally in crude palm oil (CPO) prices on the global commodity market in H1 ’22. Although prices were more subdued in H2 ’22, Nigerian palm oil producers profited from rising local CPO prices because of a significant supply-demand gap.
Seplat Energy, the sole upstream oil and gas company listed on the NGX, benefited from a sharp rise in the average realized oil prices as a result of the surge in crude oil prices that lasted for most of last year.
With respect to market activity, the investment apathy by the offshore community continued. As such, activity was dominated by domestic investors which accounted for c.77% of the total value of transactions between Jan and Nov ’22 according to data from the NGX.
Moving forward, we anticipate a muted performance from the NGX in Q1 ’23 as focus turns to the general elections in February. However, given our expectation of a recovery in H2 ’23, we continue to anticipate that the NGX will provide double-digit returns in 2023.
