Stock market thrived in 2024 amid banking reforms, new listings

The Nigerian stock market experienced impressive growth in 2024, driven by key macroeconomic developments, including banking sector recapitalisation, new listings and increased crude oil revenues, which helped to reduce the country’s fiscal imbalance.

Notable listings, such as Geregu Power, Transcorp Power, Aradel Holdings and BUA Foods, energised trading activities, offering investors a broader range of blue chip stocks.

Depreciation of the naira, influenced by macroeconomic reforms by the Central Bank of Nigeria (CBN) and the Federal Government, also significantly boosted market performance.  Foreign capital inflow steadily increased, rising from four per cent in mid-2023 to an average of 16 per cent by November 2024.

According to the Nigerian Exchange Limited (NGX), the All-Share Index (ASI) delivered a stellar return of 283.45 per cent since 2020, climbing from 26,842.07 at the end of 2019 to 102,926.40 by December 31, 2024.

The ASI closed 2024 at 102,926.40, reflecting a yearly growth of 37.65 per cent, compared to 74,773.77 at the end of 2023. Market capitalisation, which opened the year at N40.918 trillion, added N21.85 trillion year-on-year to close at N62.768 trillion.

In 2024, the CBN mandated commercial banks to raise minimum capital thresholds: N500 billion for international authorisation and N200 billion for national authorisation.

Others are N50 billion for regional authorisation, N20 billion for national and N10 billion for regional non-interest banks. Banks were given 24 months, starting April 1, 2024, to meet these requirements.

The directive encouraged banks to raise fresh equity through private placements, rights issues, public offers, mergers and acquisitions and licence upgrades or downgrades.

This move spurred equity issuances, boosting investor confidence and demand for bank stocks, contributing significantly to the market rally. Between January and November 2024, 20 companies, including 10 financial institutions and two breweries, raised N8.1 trillion in shares on NGX.

Major listings included Aradel Holdings (N3.05 trillion), Transcorp Power (N1.8 trillion) and Haldane McCall (N11.99 billion).

In the brewing sector, Nigerian Breweries and International Breweries raised N599.1 billion and N588.28 billion, respectively. Guaranty Trust Holding Company Plc raised N400.5 billion, while Access Holdings garnered N351.01 billion through rights issues.

Despite of high inflation, which stood at 34.19 per cent and 48 per cent naira depreciation in the first half of 2024, the market demonstrated resilience.
The Oil and Gas sector led with 160 per cent growth, followed by Insurance, which had 129.58 per cent increase and Consumer Goods recording 52.24 per cent.

Commenting on the performance, David Adonri, Vice Chairman of Highcap Securities, described 2024 as a “record-breaking year of fantastic performance.” He highlighted exceptional growth across all sectors, with the oil and gas sector leading with a remarkable 160 per cent appreciation. Dividends paid by listed companies surged by 118 per cent compared to the previous year, with the ASEM Board demonstrating the highest growth at 147 per cent.

Adonri attributed the primary market boom to banks’ public offerings during their recapitalisation. He noted the impact of high-profile listings such as Aradel Holdings, Transcorp Power and infrastructure funds, which mitigated the impact of delistings by Flourmills and GSK.

The introduction of a new public offering portal by NGX revolutionised public offering distribution through technology. He noted, “Equities have marginally beaten inflation with a 35.6 per cent return, compared to inflation at 34 per cent.”Adonri projected stronger performance in 2025, supported by ongoing banking recapitalisation and anticipated public offerings.

Similarly, Tajudeen Olayinka, an investment banker and stockbroker, lauded the market’s resilience amid challenges like high interest rates, inflationary pressure and exchange rate volatility. He, however, noted that ASI was yet to attain the level experienced in the year 2023, including year-to-date return.

At the closing gong ceremony for 2024, the Chief Executive Officer of NGX, Mr Temi Popoola, commended the market’s resilience and innovation. He said: “Macroeconomic shifts, particularly in the oil and gas sectors and currency devaluation, have been transformative. As we approach 2025, continued reforms and a stable macroeconomic environment will sustain growth, boost liquidity, and deliver long-term value for all market participants.”

However, with the challenges, the Nigerian stock market closed 2024 on a high note, with new all-time highs and trillion naira valuations for several companies.

Strong domestic investor participation, strategic listings and positive macroeconomic factors underscored the market’s resilience and potential for continued growth in 2025.