Tinubu Celebrates NGX Milestone as Reforms Show Results

President Bola Tinubu praised the Nigerian Exchange Group on Monday as market capitalisation crossed N100 trillion for the first time. The benchmark NGX All-Share Index closed at 101.8 trillion naira on January 5. Tinubu said his administration's economic reforms are delivering tangible results for investors.

Market Rally Driven by Banking and Industrial Stocks

Dangote Cement led the gains with a 5.2% surge to N650 per share. Zenith Bank rose 3.8% to N45.50. MTN Nigeria added 2.1% to N285. The NGX Banking Index jumped 4.3% in the first week of January. The NGX Industrial Index gained 3.7% during the same period.

Foreign investors increased their participation by 18% in December. The Securities and Exchange Commission reported N42 billion in foreign portfolio inflows last month. Domestic institutional investors accounted for 52% of trading volume.

Why It Matters

This milestone signals growing confidence in Nigeria's economic direction. The N100 trillion valuation represents a 35% increase from June 2023. Market capitalisation stood at N74 trillion when Tinubu took office in May 2023.

The Central Bank of Nigeria's monetary policy tightening has attracted yield-seeking investors. The Monetary Policy Committee raised interest rates to 18.75% in July. Higher rates made fixed-income investments more attractive relative to equities initially.

Improved corporate earnings supported the rally. First Bank of Nigeria Holdings reported a 127% profit increase for the third quarter. Nestlé Nigeria posted a 24% revenue growth despite inflationary pressures.

What Businesses Should Watch

Monitor the Central Bank's next monetary policy meeting on January 23. The committee faces pressure to maintain high rates while supporting economic growth. Inflation reached 28.2% in November according to the National Bureau of Statistics.

Watch for the Nigerian National Petroleum Corporation's planned initial public offering. The state oil company aims to list shares by mid-2024. This could add significant liquidity to the exchange.

Track the implementation of the Companies and Allied Matters Act 2020 reforms. The Corporate Affairs Commission simplified registration processes in December. New business incorporations increased by 22% in the fourth quarter.

Follow the Nigerian Exchange Group's sustainability reporting requirements. The NGX now mandates ESG disclosures for listed companies. Access Bank and Guaranty Trust Bank published their first comprehensive sustainability reports in November.

Regulatory Changes Supporting Market Growth

The Securities and Exchange Commission introduced new rules for digital assets in December. The regulations provide clarity for cryptocurrency and blockchain companies. The commission registered three digital asset exchanges in 2023.

The Nigerian Exchange launched a derivatives market in October. The new platform offers futures contracts on the NGX 30 Index. Trading volume reached N15 billion in the first two months.

PenCom, the National Pension Commission, increased the equity investment limit for pension funds. Pension fund administrators can now invest 25% of assets in equities, up from 20%. This change took effect in September 2023.

Challenges Remain for Sustained Growth

Currency volatility continues to concern foreign investors. The naira traded at N1,035 to the dollar in the official market on January 5. The parallel market rate reached N1,210 to the dollar.

Infrastructure deficits limit economic expansion. The World Bank estimates Nigeria needs $3 trillion in infrastructure investment by 2040. Power outages reduced manufacturing output by an estimated 15% in 2023.

Security issues affect agricultural and oil production. The Nigerian Upstream Petroleum Regulatory Commission reported a 12% decline in crude oil exports last year. Militant attacks in the Niger Delta disrupted operations.

Outlook for 2024

Analysts project moderate growth for Nigerian equities this year. CardinalStone Partners forecasts a 12-15% return for the NGX All-Share Index in 2024. The investment firm cites improved corporate governance and sector reforms.

The Federal Inland Revenue Service collected N12.3 trillion in taxes through November 2023. This represents a 21% increase from the same period in 2022. Higher government revenue could support infrastructure spending.

The African Continental Free Trade Area implementation may boost cross-border investment. Nigeria ratified the agreement in 2020. The trade pact could increase intra-African commerce by 52% by 2030 according to UNCTAD estimates.

President Tinubu's economic team will present the 2024 budget implementation plan this month. The National Assembly approved a N28.7 trillion budget in December. Capital expenditure accounts for 32% of total spending.

Market participants await first-quarter earnings reports in April. These results will show how companies adapted to foreign exchange reforms and subsidy removal. The outcomes will influence investment decisions for the rest of the year.