Nigerian shareholders experienced a mixed week, with equities ending on a positive note on Friday but still recording significant losses for the week. The NGX's All-Share Index fell 0.97% to 248,363.55, marking a second consecutive weekly decline. Banking stocks were among the hardest hit, losing 2.64%, while oil and gas stocks fell 3.85%. The rebound on Friday offers some relief, but investors are cautious, waiting to see if it will lead to a sustained recovery.
The Nigerian treasury bill market saw reduced demand, with subscriptions at the auction falling to ₦1.77 trillion from ₦4.23 trillion previously. Despite this, bids still exceeded the ₦900 billion offered. The 364-day stop rate edged down to 15.85%, which is the discount rate rather than the effective return on the purchase price. This development indicates that investors are becoming more selective in their investments, seeking better returns in a challenging economic environment.
In a move to raise funds, Lagos opened a bond offer with an indicative interest rate of 16.50%–16.75%. The bond, worth up to ₦200 billion and with a ten-year maturity, attracted significant attention. However, the ₦5 million minimum subscription and long maturity make access and resale liquidity crucial considerations for investors. The pricing of the bond remains subject to book building, and investors are advised to assess the final pricing and repayment terms carefully.
The naira gained 0.07% to ₦1,331.19 per dollar on Friday, showing a daily improvement. However, it is essential to distinguish this benchmark from the executable quote and charges offered by banks, which importers and businesses must consider when paying foreign suppliers. The fluctuation in currency rates can significantly impact businesses and individuals involved in international trade.
The World Bank has projected a stronger growth outlook for Nigeria, with average annual growth expected to reach 4.4% between 2026 and 2028. However, the bank also reported continuing pressure on household purchasing power. This mixed forecast suggests that while the national economy may experience growth, consumer-facing companies may face challenges due to affordability constraints among their customers.
Finance Minister Taiwo Oyedele announced that outstanding 2026 projects and spending commitments would be transferred into 2027. He clarified that the government would not run two budgets simultaneously. While this move aims to manage the budget effectively, contractors will need project-level allocations and payment schedules before they can treat this announcement as incoming cash.
Globally, oil prices recovered, with Brent settling at $104.72 a barrel, a 2.4% gain over the week. The increase was driven by hurricane-related production shutdowns, which supported prices. For Nigeria, this development could lead to increased earnings from crude exports, although local refining capacity does not remove exposure to international crude prices.
Key points
- Nigerian equities lost ₦1.58 trillion despite Friday's recovery.
- Lagos opened a bond offer with indicative interest of 16.50%–16.75%.
- Brent finished above $104, sustaining pressure on fuel costs.
