The Nigerian stock market has been on a wild ride throughout 2024, marked by significant volatility influenced by both domestic and international factors. As of October 16, 2024, the Nigerian Exchange Group (NGX) reported fluctuations in the All-Share Index, which has been impacted by rising inflationary pressures in the United States. Since mid-2024, these pressures have led to increased market instability, with the NGX experiencing a market capitalization increase of N40 billion on August 27, 2024, followed by a series of ups and downs in subsequent months. The All-Share Index rose by 63.83 basis points to 96,037.28 points, but this was preceded by a decline where the index closed at 97,582.41 basis points, down by 0.17% due to profit-taking activities among investors. Notably, Eterna Plc led the gainers with a 10% rise to N23.10, while Okomuoil saw a 9.99% increase to N379.80, showcasing the potential for gains amidst the volatility [2c1bb4fb].
Global market trends have also played a critical role in shaping the Nigerian stock market's performance. For instance, Japan's Nikkei 225 dropped 12.40% on August 5, 2024, reflecting widespread concerns over a potential US recession and disappointing payroll data. These international developments have contributed to capital flight from Nigeria, significantly impacting liquidity in the local market [2c1bb4fb].
Despite these challenges, the Nigerian economy reported a GDP growth of 2.98% in the first quarter of 2024, indicating a positive economic trajectory. However, the stock market's performance has not fully mirrored this growth, as many equities have depreciated. The Central Bank of Nigeria (CBN) has been actively implementing measures to stabilize the economy, including raising interest rates and improving the banking sector's robustness. These efforts have contributed to a narrowing gap between official and parallel market exchange rates, enhancing investor confidence [2c1bb4fb].
Investing in Nigeria's stock market requires a sound strategy, thorough research, and diversification, especially in light of the current volatility. The recent surge in trading volume, with an increase of 63.24 million shares valued at N3.884 billion, indicates heightened investor activity despite the cautious trading environment. As the market continues to evolve, stockbrokers and financial institutions are urged to collaborate for better market development and investor education, ensuring a more stable trading environment moving forward [2c1bb4fb].