Nigeria’s Equities Value Increases by N2.5 Billion Amid Mixed Market Conditions

In February, Nigeria’s listed equities rose by N2.5 billion, driven by sectors like industrial and consumer goods. The NGX All-Share Index increased by 3.18 percent, while market capitalization grew significantly. Despite overall market volatility, investor sentiment remained cautiously optimistic, supported by declining inflation and stable monetary policy, leading to a positive outlook for equity assets. Meristem analysts anticipate increased buying interest in light of the ongoing earnings season.

In February, Nigeria’s listed equities experienced a valuation increase of approximately N2.5 billion, despite fluctuating trading conditions characterized by both bargain hunting and profit-taking. Overall, the market advanced by 3.18 percent, largely propelled by investor interest in stocks from the industrial, consumer goods, and insurance sectors, despite significant losses in oil & gas and banking stocks. The Nigerian Exchange Limited (NGX) All-Share Index (ASI) rose from 104,496.12 points to 107,821.39 points, while market capitalization increased from N64.708 trillion to N67.193 trillion by February 28, 2024.

During this month, the NGX noted an increase in buy-side activities, with Zenith Bank Plc prominent in a hybrid offer encompassing a rights issue and a public offer of over several billion ordinary shares. The strong market performance was overshadowed by significant volatility, yet the NGX-ASI ended February positively as investors targeted fundamentally solid stocks, maintaining upward momentum. The market’s year-to-date return reached +4.76 percent as investor sentiment remained cautious yet optimistic.

Additionally, the National Bureau of Statistics (NBS) disclosed a decline in Nigeria’s inflation rate to 24.48 percent in January, a reduction from 34.80 percent in December 2023. Furthermore, following its monetary policy meeting, the Monetary Policy Committee (MPC) kept the Monetary Policy Rate (MPR) unchanged at 27.50 percent, along with various cash reserve ratios. These decisions are anticipated to foster positive sentiments towards equity investments.

Meristem research analysts, in a note dated February 24, projected that the stable monetary policy could enhance positive investor sentiment regarding equity assets. They opined that with the ongoing earnings season, buying interest would likely surpass selling pressures, indicating a strategic positioning ahead of corporate earnings announcements and dividend declarations. Despite a 0.62 percent decline in the equities market during the last trading week due to investor sell-offs in banking, insurance, and oil & gas stocks, the overall outlook remains cautiously optimistic.

In summary, despite mixed trading sessions marked by profit-taking and volatility, Nigeria’s equities market witnessed a valuation increase of N2.5 billion in February. The positive performance was largely driven by the industrial and consumer goods sectors, as well as the sustained investor interest in fundamentally strong stocks. With macroeconomic factors such as a declining inflation rate and stable monetary policy, the market continues to attract cautious optimism among investors.

Original Source: businessday.ng