The Nigerian stock market experienced a downturn last week, closing lower in three out of five trading sessions. Investors reacted to the previous week’s unexpectedly low inflation data, prompting a selloff in banking stocks.
The National Bureau of Statistics (NBS) had announced a revised inflation rate of 24.48% for January 2025, down from 34.80% in December 2024. The Central Bank of Nigeria (CBN) subsequently retained the Monetary Policy Rate (MPR) at 27.5%, apparently in a bid to attract foreign investments and bolster foreign exchange inflows. The apex bank had previously justified its MPR hikes in 2024 as a response to rising inflation. The reduction in the inflation rate was attributed to the recent rebasing of the Consumer Price Index (CPI).
Last week’s market performance was significantly impacted by sell pressures on banking stocks, particularly Ecobank Transnational Incorporated (ETI), which declined by 12.4%, and GTCO, which dropped by 2.9%. This weighed on the overall market, dragging the NGX All-Share Index (ASI) down by 0.6% week-on-week (W/W) to close at 107,821.39 points, compared to 108,497.50 points the previous week.
Investors lost over N421 billion W/W, as market capitalisation declined to N67.193 trillion on Friday from N67.614 trillion the previous week. However, on a month-on-month (M/M) basis, investors gained over N2.48 trillion, with market capitalisation rising from N64.709 trillion at the end of January to N67.193 trillion by February’s close. Similarly, the NGX ASI recorded a 3.2% increase in February, closing at 107,926.50 points from 104,496.12 points in January. Consequently, Month-to-Date (MtD) and Year-to-Date (YtD) returns moderated to +3.2% and +4.8%, respectively.
Trading activity showed a mixed performance last week, as trading volume declined by 8.2% while trading value rose by 3.2%. Sectoral indices were broadly negative, with the Insurance Index falling by 4.6%, the Banking Index by 3.1%, the Industrial Goods Index by 0.5%, and the Consumer Goods Index by 0.4%. The Oil & Gas Index, however, was the only gainer, appreciating by 0.6%.
Looking ahead, analysts at Cordros Research stated: “We expect cautious trading, with market sentiment likely to be influenced by ongoing corporate earnings releases and dividend announcements.”
