1 week ago
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By Chukwuma Umeorah
Investor optimism remained strong on the Nigerian Exchange Limited (NGX) during the Valentine’s Week, resulting in a significant gain of N1.83 trillion. The All-Share Index (ASI) advanced by 2.00 per cent week-on-week (WoW) to close at 108,053.95 points, marking a new record high as the index crossed the 108,000 and 109,000 psychological levels for the first time. This positive performance was driven by strong corporate earnings, increased investor appetite, and a favorable macroeconomic outlook.
The market capitalization of listed equities rose by 2.78 per cent to N67.42 trillion after briefly surpassing the N68 trillion mark. Analysts attributed the sustained rally to heightened demand in key sectors, particularly Industrial, Insurance, and Energy & Commodity, where significant price appreciation was observed.
Market observers noted that the celebratory period, known to stimulate spending across industries, appeared to contribute to a sense of optimism in the market, as consumer-focused sectors saw increased activity.
Among the top-performing stocks during the week, Honeywell Flour and UPDC led with gains of 47.1 per cent and 45.9 per cent, respectively. VFD Group followed closely, rising by 30.6 per cent on the back of a strong full-year 2024 earnings report. Other notable gainers included SUNU Assurance, which appreciated by 27.9 per cent, and Ikeja Hotel, which climbed by 24.4 per cent. Dangote Cement also contributed to the week’s gains, advancing by 21.8 per cent, as investors took positions in industrial stocks with strong fundamentals and attractive valuation prospects. Market participants suggest that increased leisure and hospitality activities during the Valentine’s period contributed to heightened demand for companies such as Ikeja Hotel, while consumer goods also enjoyed increased attention, reflecting seasonal spending patterns.
Despite the general market optimism, sectoral performance was mixed. The NGX Industrial Goods Index led the gainers with a 10.4 per cent increase WoW, buoyed by strong performances from key players such as Dangote Cement. The NGX Insurance Index recorded a 2.52 per cent gain, while the NGX Commodity Index rose by 0.43 per cent.
Conversely, the NGX Consumer Goods Index declined by 3.63 per cent, reflecting profit-taking activities and investor caution amid rising inflationary pressures. The NGX Oil & Gas Index also fell by 2.30 per cent, while the NGX Banking Index recorded a marginal decline of 0.24 per cent. “As concerns over monetary policy direction and liquidity constraints weighed on investor sentiment in the financial sector,” Cowry Research stated in their weekly review note.
On the losers’ chart, DAAR Communications recorded the steepest decline of 13.6 per cent, followed by International Energy Insurance (-10.8 per cent), BUA Foods (-10.0 per cent), Golden Guinea Breweries (-9.9 per cent), and Eunisell (-9.7 per cent). The losses in BUA Foods and other consumer-focused stocks were largely driven by profit-taking activities following prior gains, as investors rebalanced their portfolios ahead of upcoming monetary policy announcements. Despite the Valentine boost to certain consumer-focused stocks, the broader consumer goods sector faced pressure due to concerns over rising costs and inflation.
Beyond the impressive index performance, overall market activity was subdued. The total volume of shares traded during the week dropped by 40.9 per cent to 2.41 billion units, transacted across 80,988 deals, with a total trade value of N55.51 billion. Analysts suggest that the reduced trading volume reflects investor caution as market participants await further clarity on corporate earnings and policy direction from the upcoming Monetary Policy Committee (MPC) meeting scheduled for Wednesday and Thursday. While the market’s positive performance coincided with the Valentine’s Day period, the decline in activity suggests that larger institutional investors adopted a more measured approach, balancing the seasonal optimism with broader macroeconomic concerns.
Analysts anticipate that key policy decisions, particularly regarding the Monetary Policy Rate (MPR), which currently stands at 27.25 per cent. Cowry Research notes that “any adjustments to the rate could influence market liquidity and shape investor strategy moving forward. Market participants are also monitoring the newly rebased Consumer Price Index (CPI) data, which will provide further insights into the inflationary environment and guide portfolio decisions.”
Looking ahead, they forecast a mixed sentiment in the equities market as investors digest corporate earnings reports, await dividend declarations, and assess the outcomes of key macroeconomic policy decisions.
“The prospect of higher interest rates and potential liquidity tightening may create headwinds for the equities market in the short term. However, sectors with strong fundamentals, such as industrial goods and insurance, are expected to maintain investor interest due to their defensive qualities and growth potential.”
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