Macroeconomic Boost, Declining Fixed Income Rates Fuel Nigerian Stock Market Rally
The Nigerian stock market sustained its bullish momentum last week, buoyed by favorable macroeconomic conditions and a continued decline in fixed income yields. These dynamics encouraged investors to shift focus from bonds to equities, sustaining a rally that has now stretched into a seventh consecutive week. Investor optimism was further fueled by expectations of strong corporate earnings in the first half of 2025.
During the week, the Nigerian Exchange (NGX) posted gains in all five trading sessions. Market capitalization rose significantly by N3.464 trillion to settle at N79.803 trillion, up from N76.339 trillion the week before. The NGX All-Share Index (ASI) also advanced by 4.3% to close at 126,149.59 points. Key drivers of the surge included impressive performances from major stocks like MTN (+10.5%), Zenith Bank (+21.2%), GTCO (+13.1%), UBA (+19.6%), and WAPCO (+14.6%).
Strategic investor positioning ahead of the H1 2025 earnings season, along with interest in small- and mid-cap stocks and strong activity in banking tickers, also contributed to the upbeat sentiment. While the trading volume declined slightly by 1.2%, the value of trades increased by 0.1%, indicating stronger buying pressure.
Sector-wise, the market was largely bullish. The Insurance Index led the gains with a 13.8% rise, followed by Banking (+12.5%), Industrial Goods (+2.9%), and Consumer Goods (+2.2%). The Oil & Gas Index was the sole laggard, slipping by 0.7% for the week. The Month-to-Date and Year-to-Date returns climbed to 5.1% and 22.6%, respectively, reflecting growing investor confidence.
Analysts from Cordros Capital and InvestData forecast the rally will likely persist as investors reposition portfolios and seek bargain opportunities ahead of further corporate disclosures. They noted that while some profit-taking and market volatility may occur, the ongoing portfolio rebalancing and dividend announcements are expected to reinforce buying momentum, especially in undervalued and fundamentally strong stocks.
Source: Vanguard