By Dipo Olowookere
The Nigerian Stock Exchange (NSE) has continued to break more grounds, thanks to the activities of domestic retail and institutional investors.
These investors, who took charge of the market after foreign portfolio investors chickened out because of uncertainties, have continued to keep the market flying high.
They have continued to cherry-pick equities of Nigerian companies with strong fundamentals, expecting that they will weather the storm of the COVID-19 pandemic and be able to distribute dividends to shareholders.
This made the Nigerian equity market to give a 30.9 per cent year-to-date return on Tuesday, December 1, 2020, to N18.4 trillion, making the market the second and third best-performing market in the world in local currency terms and US Dollar terms, respectively, according to Bloomberg.
The total value of transactions executed by domestic investors on the NSE stood at N825.94 billion in the first nine months of 2020.
It is also evident that the equities market continues to respond positively to macroeconomic policy changes such as the cut in Monetary Policy Rate (MPR) by 100 basis points from 12.5 per cent to 11.5 per cent by the Central Bank of Nigeria (CBN) in September 2020.
The exchange has remained resilient even in the face of the COVID-19 pandemic. It would be recalled that on Thursday, November 12, 2020, the NSE All-Share Index (ASI) posted its largest daily gain in more than five years.
The ASI rose beyond the set threshold of 5 per cent, triggering a 30-minute trading halt of all stocks for the first time since the circuit breaker was introduced in 2016.
What is also noteworthy is that as multi-asset exchange hub, the exchange continues to recognise opportunities in the alternative investment asset space and is working assiduously with stakeholders to deepen market activity across these asset classes.
In the fixed income space, capitalization has risen to N17.7 trillion from N12.9 trillion as at the end of 2019 as a result of increased listing activity from the federal government and Nigerian corporates.
The Exchange Traded Fund (ETF) segment of the market continues to enjoy investors’ attention with the NewGold ETF returning 78.36 per cent YTD, the Vetiva S&P Nigeria Sovereign Bond ETF returning 45.93 per cent YTD, the Lotus Halal Equity ETF returning 43.99 per cent YTD, and the Vetiva Industrial ETF returning 55.79 per cent YTD.
In September 2020, the exchange listed two new ETFs from Meristem Wealth Management Limited; Meristem Growth (MERGROWTH) and Meristem Value (MERVAL) ETFs which are expected to further attract market activity.
Ultimately, there is immense value to be reaped for the Nigerian capital market even in the face of current realities. Investors are, therefore, encouraged to take advantage of the dynamism of the capital market by seeking out profitable investment opportunities across available asset classes.
Adedapo Adesanya