Jude Chiemeka, acting CEO of the Nigerian Exchange Ltd. (NGX), has attributed the positive trends in the stock market to the reforms implemented by the President Bola Tinubu-led administration.

NGX CEO said this in an interview on Thursday in Lagos.

He said this positive trajectory had been having a significant impact on investors’ confidence and market dynamics.

Mr Chiemeka said the stock market often served as a barometer for the overall economy, and the recent bullish trend reflected the various reforms pursued by the federal government.

He highlighted the influence of reforms on the stock market, including the harmonisation of the foreign exchange rate, removal of fuel subsidies, and efforts to ensure liquidity in the FX market.

Mr Chiemeka said, “The market, itself, is usually driven by demand and supply sentiment, the performance of companies and all the various elements of market hearsay.

“A school of thought has said that the NGX is undervalued at the moment, and there is a desire to harmonise the hamburger or black market price with the official exchange rate.

“We have seen the purchasing power parity rate of our FX being below the rate at which the market is currently trading. Hence, the harmonisation will enable various corporates to have access to liquidity at a reasonable price.”

He further said that the stock market, which had been undervalued for a significant period, had experienced renewed investor interest due to the reforms.

On the attractiveness of investing in the stock market, especially from a bullish perspective, Mr Chiemeka pointed out that it remained a means to hedge against inflation, particularly with the prevailing interest and inflation rates.

The CEO noted that the impending launch of Single Stock Futures was seen as a new avenue for investors to navigate potential, overvalued stock prices and could mitigate the volatility that might follow a bullish trend.

Regarding market dynamics, he said the current double-digit return was highlighted as aligning with prevailing FX and interest rates.

According to him, the market is characterised as forward-looking in assessing where it should be.

Mr Chiemeka maintained that the multi-asset nature of the stock market is underlined, positioning it as a platform for capital mobilisation for companies.

“On the fixed income side, we have more listings, and the Nigerian Exchange Traded Funds market is the second largest in Africa with 12 ETFs and other Exchange products listed, including mutual funds, which continue to grow in significant numbers.

“On the equity side, it is really a reflection of the policies available in the economy. As such, there is a lot of stakeholder engagement and advocacy that the NGX is doing to ensure that the government pays more attention to the market so that the main sectors of the economy are listed on the exchange.

“We believe that this will help thrive listings on the capital market, especially when we think about what the government is looking to do in terms of privatisation,” he said.

While some companies are exiting the exchange, primarily on the equity side, he noted that their departure had not significantly impacted the market.

Mr Chiemeka emphasised the potential for government entities to be privatised as a means to democratise opportunities and provide Nigerians with access to listed companies.

He said, “We are looking forward to more companies being listed on the exchange. In terms of exit seen on the equity side, it is a company’s decision to list on the market or exit it, but the NGX would continue to provide a world-class trading platform that would allow corporates to come and also exit anytime they wish to.

“What is really key is that the market is robust, growing with world-class infrastructure for trading systems for fair market discovery and secondary market liquidity for listed corporates.”

The NGX All-Share Index on Jan. 24 rose by three per cent or 2,954.14 points to cross the significant 100,000 mark and settled at 101,571.11. Similarly, the market capitalisation, which opened at N53.967 trillion on Tuesday, January 23, closed at N55.583 trillion on January 24.

Among stocks worth over N1 trillion driving the market are BUA Cement, BUA Foods, Dangote Cement, Guaranty Trust Company, Zenith Bank, Airtel Africa, MTN Nigeria, Transcorp Hotel, Gereru and Seplat Energy.