Improved corporate performance, buoyed by government reforms aimed at stabilising the foreign exchange market, has continued to drive transactions on the Nigerian equities market, with investors gaining over N1.8 trillion in three days.
Market capitalisation of listed equities, which stood at N66.6 trillion as at Friday, rose by N1.8 trillion or 2.6 per cent to close at N68.412 trillion yesterday.
Also, the all-share index (ASI) appreciated by 2,807.26 to 108849.83 points from 106,042.57 recorded on Friday.
The recent surge is largely attributed to pro-market policies introduced by the new administration, including the removal of fuel subsidies and plans to unify exchange rates. These measures have boosted investor confidence, encouraging a shift from fixed-income securities to equities, where returns are currently more promising.
Major blue-chip stocks like Dangote Cement, MTN Nigeria, BUA Cement, and leading financial institutions such as GTCO, Zenith Bank and UBA have seen significant price appreciation, driven by strong corporate earnings and attractive dividends.
For instance, top five Nigerian banks have posted a combined profit before tax (PBT) of N5.1 trillion for the 2024 financial year, a 59.4 per cent increase from N3.2 trillion recorded in 2023. Five tier-1 banks’ pre-tax earnings rose from N1.1 trillion in 2022 to N3.2 trillion in 2023, indicating the banks’ ability to adapt and thrive in a dynamic economic environment.
Companies in the Fast-Moving Consumer Goods (FMCG) sector have shown signs of recovery, with several returning to profitability, a clear signal that dividend payments may be on the horizon. Others have also managed to significantly reduce their foreign exchange losses, further boosting investor sentiment.
Analysts believe this positive momentum reflects growing investor confidence in Nigeria’s economic outlook, particularly as the government steps up efforts to attract foreign capital through proactive engagement with international investors.
However, market experts urge caution, noting that the sustainability of this bullish trend depends on the effective implementation of ongoing reforms and the continued strong performance of listed companies.
Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, explained that the recent market rally reflects expanded positive market breadth amid robust buying sentiment. He attributed this trend to better-than-expected Q1 corporate earnings, which have encouraged market players to rebalance their portfolios, capitalising on sector rotation and earnings strength.
According to Omordion, the NGX has sustained three consecutive sessions of bullish trading, driven by growing investor confidence even as many global markets face sell-offs and mixed sessions.
He noted that impressive earnings across various sectors, from low to high-cap stocks, have drawn more players into the market, given the relatively low price-to-earnings ratios available.
“We expect the positive sentiment to continue as investors react to stronger Q1 numbers and engage in sector rotation, buying into value stocks in anticipation of further earnings reports. This comes amid profit-taking and portfolio reshuffling, with a few audited accounts expected to hit the market alongside dividend announcements,” Omordion added.
Analysts at Vetiva Dealings and Brokerage said: Investor sentiment remains positive following strong showings in banks and consumer goods stocks. We expect a continuation of selective buying, though gains may moderate as the week winds down. Overall, market tone remains positive in the absence of adverse macro triggers.”
Yesterday, market breadth was positive, with 48 stocks recording gains compared to only 17 losers, indicating widespread buying interest.
Meryer Paint and UPDC led gainers table with 10 per cent each to close at N8.80 kobo and N6.60 kobo, respectively, while Betaglass followed with a gain of 9.98 per cent to close at N146.05 kobo.
TIP added 9.95 per cent to close at N6.08 kobo. Vitafoam Nigeria Plc also gained 9.94 per cent to close at N55.85 kobo.
On the contrary, Deap Capital topped the losers’ chart, dropping by 10 per cent to close at N1.08 kobo, Veritas Kapital trailed with a loss of 9.09 per cent to close at N1.
Linkage Assurance declined by 6.61 per cent to close at N1.13 per unit, Afriprudential declined by 5.6 per cent to close at N16. UPDC also depreciated by 4.46 per cent to close at N3.
Volume of trades surged by 112.013 million, representing 24.49 per cent, as investors traded 587.472 million shares valued at N18.659 billion in 17496 deals.
