Nigeria’s economy records 15 consecutive quarters of growth, driven by the services sector and lately high oil production. The Nigerian stock market also sees a strong rally as investors focus on high-quality stocks.
Despite the challenges, Nigeria’s economy has shown remarkable resilience, experiencing accelerated growth for the fifteenth consecutive quarter. The growth rate of 3.19% year-on-year in Q2 2024 surpasses the previous year’s record and the first quarter’s growth. The services sector, particularly telecommunications, financial institutions, real estate, construction, professional, scientific, technical services, and broadcasting services, played a significant role in this growth, contributing 58.8% of the total GDP.
The agriculture sector saw modest gains, growing by 1.41%, slightly below the 1.50% growth recorded in Q2 2023. The industrial sector grew by 3.53%, driven by the manufacturing sector. However, negative performances in the transportation sub-sector, particularly in road and air transport, undermined the growth.
The oil sector’s real growth was 10.15% year-on-year in Q2 2024, an increase of 23.58 percentage points compared to the corresponding quarter of 2023 (13.43%). The oil sector contributed 5.70% to the total real GDP in Q2 2024, higher than the figure recorded in the corresponding period of 2023 but lower than the preceding quarter’s contribution of 6.38%.
On the other hand, the non-oil sector maintained its growth, recording a real growth rate of 2.80% in Q2 2024. This sector was driven mainly by financial and insurance services, information and communication, agriculture, trade, and manufacturing, all contributing to positive GDP growth.
Stock Market
This week, the Nigerian stock market experienced a strong rally, driven by widespread optimism and favorable macroeconomic data. This positive momentum led to equity investors focusing on high-quality stocks with strong fundamentals and encouraging chart patterns. The benchmark All-Share Index of the market increased by 0.63%, reaching 96,579.54 points, indicating a gradual return of strength to the market. The market capitalisation of traded equities rose by 0.63% week-on-week, reaching N55.48 trillion, driven by positive price movements across various sectors.
Market momentum was strong, with weekly trade value surging by 55.3% to N51.34 billion, despite a 52.4% decline in trading volumes to 2.69 billion shares. All five sectors under observation closed in positive territory, with the NGX Oil & Gas and NGX-Insurance indices leading the charge with weekly gains of 8.55% and 6.10%, respectively. The NGX Consumer Goods, NGX Banking, and NGX-Industrial Goods indices also reported notable gains of 3.5%, 1.60%, and 0.04%, buoyed by positive price movements in OKOMUOIL, MCNICHOLS, INTBREW, FBNH, JULIUS BERGER, BERGER, and ETI.
At the close of the week, stocks like OANDO (61%), DEAPCAP (57%), MCNICHOLS (57%), DAARCOMM (55%), and NSLTECH (54%) emerged as the top gainers, drawing significant investor attention. Conversely, TRANSPOWER (-10%), MTNN (-10%), UPL (-9%), UNITED CAPITAL (-8%), and EUNISELL (-6%) were the week’s laggards, as investors offloaded these stocks as part of a broader portfolio rebalancing exercise.
Conclusions
Nigeria’s economy is experiencing positive growth despite challenges like high price pressures, global dynamics, rising interest rates, and depreciation of the local currency. The non-oil sector plays a crucial role, with financial institutions developing consumer-tailored services and adopting technology. The oil sector has expanded rapidly, but downside risks include crude oil theft, pipeline vandalism, and regulators’ inability to encourage refining. Normalization and implementation of new government reforms are expected to drive national output growth, supported by industry and services sectors. A dovish tone from the Central Bank of Nigeria in September and moderate price levels are also expected to support further upward output growth.
The local bourse is expected to continue to be dominated by market sentiment, with position-taking and portfolio reshuffling intensifying ahead of September trading. The NGX shows signs of recovery, with equity investors capitalizing on pullbacks to acquire value stocks. However, focusing on fundamentally sound stocks is crucial, as this will help mitigate potential risks and ensure a more stable investment portfolio.
Comment, Like 👍, share this article, and Follow us on our social media handles.
WhatsApp Channel
Telegram Channel
