January 4, 2024/CSL Research

The Nigerian stock market has commenced the new year on a promising note, with investors strategically positioning themselves for potential dividends. Positive sentiments are buoyed by optimism surrounding the oil sector and its anticipated impact on the overall economy. The Nigerian Exchange All-Share Index (NGXASI) has already recorded a commendable 3.70% year-to-date increase, building on its impressive 45.90% year-on-year surge to reach 74,773.77 points in 2023.

The Nigerian Stock Market stood out amongst peers in 2023, delivering returns that surpassed inflation rates. Robust participation was observed among both Nigerian residents and the diaspora, with very little participation from Foreign Portfolio Investors (FPIs) as concerns around FX liquidity continue to deter FPIs.

The inauguration and the announcement of policy changes by the new administration in Q2 2023 sparked positive sentiments leading to a significant growth in the NGX ASI. Moving past the election era and into the post-election period, the local bourse continued to reach new heights driven by positive corporate announcements and dividend expectations.

All the sub-indices of the NGX have all risen in the first days of the year with the Insurance (NGXINS) and Banking Sector (NGXBNK) taking the lead, up 6.49% and 6.30%ytd whilst the Industrial (NGXINDUSTR) and Oil and Gas (NGXOILGAS) have grown the least by 2.46% and 2.26% ytd respectively.

The equities market will likely remain upbeat at least for the first few months of the year, albeit with intermittent profit taking. Dividend yields on many of the major high dividend paying stocks in the market are more attractive than the current yield on the 91-day Treasury Bills, which is 3.92% annually.

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