Nigerian Stocks End 2022 With 20% Yield


As in recent years, stocks are having their moment in Nigeria. Yet the optimism that fed that trend in 2022 was unusually robust for a year in which that had enough wrecking balls to tip Nigerian stocks southward.

Returning 20 per cent or N4.7 trillion at the sound of the closing bell on Lagos Customs Street on Friday, Nigeria’s main equity index had swum against the trend in the broader global stock market, where equities had shed as much as $18 trillion or over 20 per cent as of 07:00 the same day, according to the MSCI All-Country World Index (ACWI).

MSCI ACWI tracks the performance of about 3000 stocks in 48 developed and emerging market countries.

The yield for 2022 compares with that of last year when the Nigerian stocks delivered 6.1 per cent or N471 billion. It is now at least three years in a row that the Nigerian equity market will post positive returns, the biggest being in 2020, when it yielded over 50 per cent as the best-performing stock index in the world, according to Bloomberg ranking.

Investors’ appetite for stocks took a new turn during the year, catapulting the main equity index to 54,085.3 on May 27, 2022; that was the pinnacle the market had reached in almost 14 years.

“At one point, it was so obvious that stocks have reduced in price to a point as it has not been seen since 2020. It was very obvious at one point that the market would pick up again,” said Damilare Ojo, head of investment research at Meristem Securities in response to a question on what factors drove stock prices.

“There was room for bargain hunting at that point when we saw that sharp decline in price.”

That the Nigerian stock market had a remarkable outing in the year Bloomberg described as the “worst for stocks and bonds in more and decade” seems to be a testament to its potential to withstand fiercely stormy days and muster domestic participation at a time the inflow of foreign investors dollars has thinned to a mere trickle.