Market Cap Appreciates by N1.75trn in One Week on Investors’ Confidence

Kayode Tokede 

The market capitalisation  of listed stocks on the Nigerian Exchange Limited (NGX) advanced by N1.75 trillion in one week, extending to its fourth consecutive week on renewed investor interest, in the Banking, Oil & Gas, and Consumer Goods sectors.

The market cap increase in one week was driven by the Central Bank of Nigeria’s (CBN)  forbearance directive—eased following clarifying disclosures from banks, while a softer May inflation print further supported the improvement in overall market sentiment. 

The restrictions specifically targeted banks that had breached the Single Obligor Limit (SOL) or had unresolved forbearance loans dating back to the COVID-19 era. 

The announcement triggered panic selling across the financial sector, leading to a sharp dip in market value. However, the selloff was short-lived. Midweek, the apex bank moved to calm nerves by reaffirming the resilience and soundness of Nigeria’s banking sector, which helped restore confidence among investors. This sparked a strong rebound and propelled the market into positive territory.

Specifically, market capitalisation gained N1.75 trillion to close the week at N74.534 trillion, due to the listing of 6.7 million additional shares of Sterling Financial Holdings Company during the week from the company’s rights issue of 7.2 million ordinary shares.

The Nigerian Exchange Limited All Share Index (NGX ASI) rose by 2.35 per cent in one week to close at 118,138.22 basis points, to bring the month-to-date and year-to-date returns settled higher at +5.7per cent and +14.8per cent, respectively. 

Sectoral performance was broadly bullish, as the Oil & Gas (+5.3per cent), Banking (+3.6per cent), Insurance (+2.4per cent), and Consumer Goods (+2.2per cent) indices advanced, while the Industrial Goods (-0.4per cent) index settled lower. 

Also, market breadth for the week was positive as 55 equities appreciated in price, 42 equities depreciated in price, while 51 equities remained unchanged. Ellah Lakes led the gainers table by 23.09 per cent to close at N5.33, per share. Beta Glass followed with a gain of 19.43 per cent to close at N276.00, while Livingtrust Mortgage Bank went up by 18.88 per cent to close to N6.80, per share.

On the other side, Northern Nigeria Flour Mills (NNFM) led the decliners table by 17.19 per cent to close at N93.20, per share. Sunu Assurance followed with a loss of 12.81 per cent to close at N4.56, while Oando declined by 11.59 per cent to close at N61.00, per share.

Overall, a total turnover of 3.566 billion shares worth N115,403 billion in 99,960 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 2.057 billion shares valued at N51.015 billion that exchanged hands previous week in 65,016 deals.

Looking ahead, Cowry Asset Management Limited remain cautiously optimistic, saying that “with over N283 billion worth of NT-bills set to mature in the coming week and no fresh NT-Bills auction scheduled, excess liquidity may spill into the equities space.

“In addition, the continuation of the dividend season and expectations of undervalued stocks gaining ground are likely to drive further buying momentum. Nonetheless, we continue to advise investors to maintain a disciplined approach, focusing on fundamentally sound, dividend-paying companies amid ongoing policy and macroeconomic uncertainties.”

Afrinvest Limited said, “this week, we expect the market to remain positive buoyed by strategic plays by major banks to strengthen investor confidence following notable CBN’s circular earlier this week.”

Analysts at Cordros research in a report  said, “In the week ahead, we anticipate a more selective market tone as investors continue to position themselves ahead of the half-year earnings releases. Activity is likely to remain driven by stock-specific developments and early signals from corporate scorecards.”