The Nigerian Exchange Limited (NGX) started 2024 with strong performance, recording a 26.43% year-to-date return by the end of January, making it the top-performing stock market globally at that time.
By August 9, 2024, the NGX’s YTD return reached 31.85%, driven by increased investor confidence, strategic government policies, and strong corporate earnings.
However, the sharp devaluation of the naira has raised concerns about the sustainability of these gains when measured in dollar terms.
While the NGX saw significant growth in naira terms, the equivalent value in dollars declined due to the naira’s devaluation from N462/$ to N1,589/$ by August 2024.
This currency depreciation has impacted the market’s real value compared to other African stock markets like the Johannesburg Stock Exchange (JSE) and Ghana Stock Exchange (GSE), where the NGX’s gains appear less impressive in dollar terms.
The devaluation has also led to significant foreign exchange losses for companies, particularly in the manufacturing and telecommunications sectors.
Despite these challenges, the NGX has seen substantial foreign investment inflows, with N229.07 billion recorded in the first half of 2024, showing continued interest from foreign investors.
Looking ahead, the potential listing of major entities like Dangote Petroleum Refinery could deepen the market and attract more investors, helping to offset the negative effects of currency devaluation.
The NGX management is also focused on technological advancements and innovative solutions to make the market more attractive to both domestic and foreign investors.