Reports on the performance of the Nigerian Exchange since the years, have revealed that the nation’s bourse showcases an All Share Index (ASI) that crossed 50,000 as of Wednesday, May 4th, with trading closing at 50,126 points.
This is the first time the All-Share Index, which is the broad index that measures the performance of Nigerian Stocks, has exceeded the 50,000 mark since July 2008, when it closed at 53,110.
The ASI rose to as high as 65,652.4 in February, 2008, its highest ever, and had since then not exceeded the 50,000 point.
Total market capitalisation now stands at a record high of N27.9 trillion up from N22.2 trillion at the end of December 2021, reflecting a 25.7 percent growth as stocks have now gained a significant amount of N5.7 trillion within 17 weeks of trading.
Experts explain that against the backdrop of a global sell-off, Nigerian ASI has defied odds, gaining for the last 18 straight days, taking the year-to-date gains to over 21.5 percent. The ASI is now trading at 51,903 and is likely to keep sustaining the surge.
Reports add that globally, stocks have had a difficult year, exacerbated by rising inflation and geopolitical challenges.
Notwithstanding the headwinds faced by the Nigerian economy characterised by rising inflation, scarcity of forex, and a rise in Ponzi schemes, stocks continue to rise amidst an increase in demand from investors with little to no alternative investments.
Reports further reveal that at the end of last week (May 6), stocks like MTN, BUA, Nigerian Breweries and Guinness, had all racked up double-digit gains year-to-date leading to a surge in share prices that has unlocked tens of billions in market valuation for investors.
Experts have offered possible reasons for the bullish trend in the Nigerian Exchange this year to include the fact that most investors are ‘overweight on fixed income securities such as treasury bills, bonds, and commercial papers’, thus, they see the stock market as a viable alternative.
The high dividend yields from some valuable Nigerian stocks also offers an attraction, as dividend yields for some stocks traded at a higher premium compared to fixed income investments which offered single-digit yields.
Also, most of the driving volumes are local investors rather than foreign investors.
During the global financial crisis, Nigeria’s ASI fell from a height of 66,000 basis points in March, 2008, to less than 22,000 points by January, 2019, with over N8 trillion or 70 percent of the total market capitalisation of The Exchange wiped out.