A majority of Nigeria’s stocks across all sectors have pushed the NGX to positive results last week, yet again. Experts believe the recent economic policies of President Bola Tinubu could be responsible.
Driven by stocks across all sectors of the economy, Nigeria’s NGX continued its bullish run last week, delivering a strong close for the exchange. The NGX All Share index was up 3.40% at close of the week. Despite overall growth, the banking sector remained the best performer, gaining 9.82% at the close of the week.
Financial markets experts told TechCabal that investors are reacting positively to some of the economic policies of the Tinubu administration. Last week, President Tinubu signed an executive order deferring the implementation of two key taxes until September 2023. The Tinubu admin also formed a committee on fiscal policy and tax reforms headed by Taiwo Oyedele, signalling the possibility of critical tax reforms.
Onome Ohwovoriole, an analyst with Money Africa, told TechCabal that last week’s market rally was a case of a rising tide lifting all boats. Oise Ajayi, the head of investment research at Achoria asset management, also said, “Investors are seeing a step in the right direction and that is what they have been reacting to. Prices are rising now and they are not moving in one direction. Banking and oil gas stocks have been very strong drivers of market performance. Oil and Gas stocks have been on the rise since they took out fuel subsidy from the sector. Added with banking, they are the top two sectors.”
Foreign investors remain cautiously optimistic
Several analysts say that foreign investors are still on the sidelines. According to the NGX, foreign-investor participation has increased to 12% of transactions from 4% before the devaluation. While it’s an increase, many are still waiting on deeper reforms.
With H1 financial results on the way, there’s a sense that the NGX’s good run will continue if companies report strong numbers. “We are not expecting any significant downturn yet. For now, the sentiment feels positive and we believe it will remain that way in the next trading sessions. Also, we are going to be seeing H1 results and the ones that will declare dividends. Investors would make decisions based on the outcome of that,” Ajayi added.
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