“Nigerian inventory market is no longer a mirrored image of the economy”– Egie Akpata 

The Nigerian inventory market’s performance does no longer precisely symbolize the broader economy, which remains largely casual and dominated by agriculture.

Egie Akpata, Chairman of Skymark Partners, mentioned this throughout the Nairametrics Q4 Financial outlook themed- Nigeria Financial Outlook 2025 Level of curiosity: Trade Payment, Hobby Payment, Financial Development, Geopolitics.

Akpata’s prognosis supplied key insights into the capital market’s performance in 2024 and its disconnection from Nigeria’s financial realities. He explained that while the inventory market has proven resilience, it does no longer adequately symbolize the broader Nigerian economy.

“The Nigerian economy is largely casual. And ought to that you just can presumably have in thoughts that Agriculture is the final word sector, and that sector is kind of non-existent in the inventory market. 

“Additionally, the Nigerian inventory market is no longer a mirrored image of the Nigerian economy at all. There are very orderly corporations in some sectors which may perhaps perhaps be appropriate no longer represented,” he mentioned.  

This gap, he illustrious, highlights the boundaries of the inventory market as a total measure of business negate.

Resilience of the inventory market in 2024 

No topic these boundaries, Akpata acknowledged the resilience of the Nigerian inventory market in 2024 despite the industrial challenges

“However from the inventory market point of scrutinize, one year-to-day return is acceptable 30%. That 30% is roughly what changed into at the starting up put concentrated due to the one year-to-date return changed into 30% by April and it’s been flat since April. 

“The initial stride-up in that index, the all-part index changed into extremely concentrated in a number of very orderly stocks, the likes of Dangote Cement, BUA Meals, Geregu Energy, and a number of others that had very unheard of performance in Q1. However ever since then, the return space has roughly broadened out,” he mentioned. 

Key drivers of market performance 

Akpata identified the banking and petroleum sectors because the most most famous drivers of inventory market performance in 2024.

Banking sector: Akpata explained how Nigerian banks have benefitted from vital financial adjustments in 2024, in particular in foreign alternate (FX) and past-time charges

“The banks have considerably benefited from broad adjustments this one year. One is the FX charges. There changed into a length the put banks had very orderly FX gains. 

“And so the authorities determined that they wished 70% of these gains. And these gains seem like disappearing from the accounts of the banks due to no person needs to quit 70% of their money to the authorities.  

“However on the same time, ought to you survey on the pastime fee atmosphere, in February final one year, the one-one year cleave mark on a Treasury invoice changed into 2.25%. In the final auction final week, it changed into 23.5%. Now, ought to that you just can presumably have that roughly motion, in most cases a 10-fold motion in charges, any individual is benefiting by hook or by crook. 

“And that’s in most cases the banks due to excessive pastime charges point out better revenues for them, and more on the general than no longer, better margins. In particular when we’re in truth in an atmosphere the put a bank can accumulate about 30% threat-free from the central bank of the Nigerian authorities. So what are you paying on deposits? The frequent broad bank’s mark of funds is no longer as a lot as 10%.” 

He extra explained that these dynamics point out that banks now have very broad margins and are benefiting. They are cheerful to go the prices on to customers and shareholders. The web beneficiary is from that

Petroleum sector: Akpata disclosed that both upstream and downstream petroleum corporations experienced vital income boost. He attributed this to petrol mark deregulation and beneficial alternate charges.

“Petrol prices are in truth four times better than they had been on the initiate of ultimate one year, boosting downstream company revenues. Upstream corporations, on the choice hand, have benefited from greenback-denominated revenues’ he explained. 

“Downstream petroleum corporations don’t have a desire. There’s no cheap petrol anyplace so they go these prices on to you 100%,” he mentioned. 

Challenges confronted by listed corporations 

• Akpata also highlighted the challenges some listed corporations confronted due to macroeconomic stipulations. A vital insist changed into the naira’s depreciation, which negatively impacted corporations with vital foreign substitute liabilities.

“Very orderly corporations appreciate MTN, Nestle, and Dangote Sugar now have unfavorable shareholders’ funds due to foreign alternate losses. It is no longer a typical pain for such orderly corporations to theoretically must don’t have any capital,” Akpata mentioned. 

• Additionally, rising prices and declining buying energy restricted the capacity of some corporations to go on prices to buyers, extra straining their performance.