Market: Santa Claus Rally In Full Gear As NGX Hits All-Time Highs

Given that the NGX this week surged to record highs, indicating a Santa Claus rally, investors are feeling upbeat.

As of December 20, 2023, the NGX’s all-share index closed at 73,397.71 points, marking an all-time high on the market, having gained 1.39% this week.

This week, the market’s value increased beyond N40 trillion for the first time, while equities also saw gains of N551 billion.

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A yearly spike in stock prices that often takes place in the latter weeks of December and lasts into early January is referred to as the “Santa Claus rally.” It takes its name from the holiday season and the belief that stock markets often see an uptick in value at this time of year for investors.

For the NGX, the concept of the Santa Claus rally can be linked to two factors, which are:

Portfolio adjustments: Fund managers, institutional investors, and retail investors usually engage in portfolio rebalancing at the end of the year. This leads to increased buying activity, which potentially boost stock prices.

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For example, signs of portfolio rebalancing can be seen in Infinity Trust Mortgage Bank which has gained 33% this week alone. It can also be seen with Multiverse Mining and Exploration that has gained 16.8% this week alone.

Market Sentiment: This year, the market sentiment in the NGX has been bullish as it has recorded a year-to-date return of 43%, its best yearly return since 2020.

This factor has significantly contributed to the market’s performance this period, as optimism from the year has spilled into the holiday season, with investors being bullish and optimistic about 2024 in the NGX.