Will the bulls keep the charge?

• Published date: 09 January 2023
• Publication title: Nigeria - The Nation

The capital market has shown resilience in a global market buffeted by crises and a national economy toughened by misalignments. Increasingly, the bulwark for national survival, governments and corporates' hopes for finance rest more on the capital market.The domestic investors want the dividends and capital gains to keep flowing. Deputy Group Business Editor Taofik Salako examines the underlying currents for another bullish year for the market

The Federal Government plans to source nearly one-third of the funding for the N21.83 trillion 2023 budget from debt issuances at the domestic capital market. With global crises scampering nations to self-survival, Nigeria, like many other nations, has increasingly turned to domestic sources.

The relative depth and resilience of the market have proven to be the much-needed support system the country needs, especially in the light of implications of its foreign exchange (forex) crisis on foreign debt issue. The governments and corporates raised not less than N5 trillion in new debt and equity issues in 2022. Domestic investors account for more than three-quarters of transactions at the capital market.

The Federal Government plans to fund 2023's N11.34 trillion budget deficit largely through borrowings. These include N7.04 trillion from domestic debt issuances, N1.76 trillion from foreign sources, N1.77 trillion from multilateral and bilateral loan drawdowns and about N206.18 billion from privatization exercises during the year. Also, about N553.46 billion is expected to be financed by additional revenue from Spectrum fees and tax on the maritime sector.

From whichever perspective, the capital market has been a major silver lining in the forex-sapped and inflation-ragged economy. Against the global trend, net capital gains at the stock market stood at N4.45 trillion. Bucking a perceived tendency to depreciate in pre-election year, the benchmark index for the stock market closed 2022 with full-year average return of 19.98 per cent, equivalent to net capital gain of N4.455 trillion. This was the third consecutive year of a significant bullish run. Nigerian equities had closed 2021 with average return of 6.07 per cent, equivalent to net capital gains of N1.278 trillion. In the throes of the outbreak of COVID-19 pandemic in 2020, Nigerian equities had recorded average return of 50.03 per cent, representing net capital gains of N6.483 trillion.

The All Share Index (ASI) - the common value-based index that tracks all share prices at the Nigerian Exchange (NGX) closed 2022 at 51,251.06 points as against its 2022's opening index of 42,716.44 points...