Nigerian Capital Market Q3 2024 Review: Listed Equities Show Resilience as OTC Stocks See Strong Growth
The Nigerian Equity Market commenced 2024 with a strong 35.28% growth in January, setting the tone for a year of mixed performance. The listed equity market experienced alternating months of growth and decline, the steepest drops occurred in April (-6.06%) and July (-2.28%). Despite these setbacks, the market showed resilience with recoveries in March, May, June, and September.
The market closed positively in September, posting a 2.05% gain, signalling optimism. The NGX All Share Index (NGXASI) grew by 31.81%, rising from 74,773.77 on December 29, 2023, to 98,558.79 as of September 30, 2024. This growth was driven by growing investor confidence and the listing of Transcorp Power Plc, which raised market capitalisation and investor sentiment (see Table 1 below).
Table 1:
The Nigerian equity market saw a robust 39.84% growth in Q1 2024, rising from 74,773.77 to 104,562.06. However, the second and third quarters witnessed modest corrections, with declines of -4.31% in Q2 and -1.50% in Q3. This was driven by economic challenges, including high inflation, a depreciating exchange rate, and the introduction of a windfall tax that affected sectoral performances, particularly within the Banking sector.
Despite the smaller decline in Q3, investors are cautiously optimistic. They expect a modest bullish turnaround in Q4, encouraged by improving sentiment and probable policy adjustments (see Table 2 below).
Table 2
In parallel, the NASD OTC Securities Exchange (NSI) saw remarkable growth in 2024. The index rose by 156.18% year-to-date (YTD), climbing from 927.47 to 2,376.02 by September 30, 2024. Despite a -9.52% decline in July, the index rebounded sharply, growing 37.30% in August and posting an impressive 54.99% increase in September, marking its highest Quarter-on-Quarter (QoQ) performance so far.
The growth highlights strong investor confidence in the NASD market, setting a promising outlook for the remainder of the year (see Table 3 below)
Table 3
Resilient Growth in Mutual Funds Performance in Q3 2024
The Nigerian Mutual Funds Market continued its robust performance in Q3 2024, with the total value of all funds rising 13.95% year-on-year (YoY) to N2.031trn. Seven (7) of the ten (10) mutual fund types posted positive returns, while three (3) ended the quarter in the red.
Investor appetite for money market funds surged, driven by attractive rates on money market instruments. These funds led the market with an impressive 57.03% return, outperforming other categories such as Ethical, Exchange-Traded Funds (ETFs), and Balanced Funds. The rally in the Nigerian equity market also boosted interest in equity-based funds, which recorded a 22.62% return for Q3 2024.
On the downside, Dollar Funds, Bond/Fixed Income Funds, and Shariah-Compliant Funds were the worst performers, with returns of -20.88%, -27.23%, and -88.80%, respectively. Analysts attribute these declines to rising inflation expectations, lower bond prices, currency risks, and negative real returns, which dampened investor appetite for long-term instruments.
Looking ahead to Q4 2024, analysts expect continued monetary tightening to sustain investor interest in money market instruments, equities, and ETFs. Meanwhile, caution will likely remain for long-term funds due to the risks in the broader economic environment (see Chart 1 below).
Chart 1:
