Nigerian equities closed the week with a net capital gain of N1.5 trillion as investors increased their stakes in quoted shares. This was driven by expectations of lower corporate costs and improved earnings. The Central Bank of Nigeria (CBN) had earlier in the week announced a major cut in the nation’s underlying interest rate benchmark, reducing the Monetary Policy Rate (MPR) by 350 basis points from 26.50 per cent to 23.00 per cent.
The Monetary Policy Committee (MPC) of the CBN reduced the MPR by 350 basis points and adjusted the Standing Facilities Corridor around the MPR. The MPR serves as the anchor rate for interest rates in the economy and is the baseline rate for transactions between the central bank and other banks. This move is expected to have a positive impact on the stock market.
The upgrade of Nigeria from “Unclassified” to “Frontier Market Status” by FTSE Russell also took effect at the beginning of trading for the week. This upgrade is expected to increase investor confidence in the Nigerian stock market. The benchmark index for the Nigerian stock market, the All Share Index (ASI), rose from its week’s opening index of 249,804.56 points to close at 252,113.41 points.
The aggregate market value of all quoted equities at the Nigerian Exchange (NGX) closed the week at N163.655 trillion, indicating a net capital gain of N1.5 trillion. The rally nudged Nigeria’s average year-to-date return to 62.01 per cent, strengthening the country’s position as one of the world’s five best-performing stock markets.
There were nearly two advancers for every decliners as investors opened up market orders in a demand-driven market. The financial services sector remained the most active with a turnover of 3.537 billion shares valued at N116.666 billion in 115,985 deals. The ICT sector followed with 279.827 million shares worth N15.773 billion in 29,520 deals.
Critical Minerals Financing Corporation (CMFC) Plc led the 61-stock gainers’ chart with a gain of 59.8 per cent to close at N3.26. Thomas Wyatt Nigeria and UPDC Plc also recorded significant gains. On the negative side, Haldane McCall led 31 other stocks on the losers’ chart with a drop of 16.67 per cent to close at N3.
Analysts attributed the rally to expectation of strong earnings performance by quoted companies on the back of a stable macroeconomic environment and gradual reduction in costs of operations. Analysts at Cordros Capital said investors’ focus would remain on stability of inflation and exchange rate, two critical elements to sustaining market confidence.
Key points
- The Nigerian equities market gained N1.5 trillion as investors upped stakes amid expectations of lower corporate costs and improved earnings.
- The Central Bank of Nigeria reduced the Monetary Policy Rate (MPR) by 350 basis points from 26.50 per cent to 23.00 per cent.
- Nigeria was upgraded from “Unclassified” to “Frontier Market Status” by FTSE Russell, increasing investor confidence in the Nigerian stock market.
