Nigeria’s Equity Market Rises By N2.5bn In February Despite Volatility

The value of Nigeria’s equity market increased by N2.5 billion in February despite fluctuations caused by bargain hunting and profit-taking. The market recorded a 3.18% rise due to strong performances in industrial, consumer goods, and insurance stocks, even as oil & gas and banking stocks faced declines.

At the start of February, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) stood at 104,496.12 points, with a market capitalization of N64.708 trillion. By the end of the month, these figures had climbed to 107,821.39 points and N67.193 trillion, reflecting steady investor confidence.

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Factors Driving Market Growth

The equity market benefited from increased investor interest in companies with strong fundamentals. Despite market volatility, investors remained active, particularly in industrial and consumer goods sectors. The rise was further supported by the listing of Zenith Bank Plc’s hybrid offer, which included:

• Rights issue of 5.23 billion ordinary shares at N36 per share
• Public offer of 2.77 billion shares at N36.50 per share

These activities contributed to liquidity in the equity market, attracting more investors and strengthening market momentum.

Economic Indicators and Monetary Policy Decisions

The market’s year-to-date return stood at 4.76%, boosted by economic data and monetary policy decisions. In February, the National Bureau of Statistics (NBS) reported that Nigeria’s inflation rate had dropped to 24.48% in January, down from 34.80% in December 2024 after rebasing.

Additionally, after its 299th monetary policy meeting, the Monetary Policy Committee (MPC) maintained key rates to stabilize the economy:

• Monetary Policy Rate (MPR): 27.50%
• Cash Reserve Ratio (CRR) for deposit money banks: 50%
• CRR for merchant banks: 16%
• Liquidity ratio: 30%

Market analysts believe the equity market could continue to benefit from the MPC’s decision to hold rates, as this move may improve investor sentiment.

Final Week of February Sees Market Decline

Despite overall gains in February, the equity market closed the last trading week in the red, dropping by 0.62%. Investors sold off banking, insurance, and oil & gas stocks, pushing the market lower.

Analysts at Meristem Research noted that while monetary policy stability might boost positive sentiment, investor focus remains on full-year earnings reports and dividend declarations. They expect buying interest to pick up as companies release financial results.

With ongoing economic adjustments and corporate earnings season in view, the equity market may experience further shifts in March as investors respond to new financial data and policy directions.