Overview:
- The NGX All Share Index (ASI) has reached a new all-time high of 109,172.03 points, extending its record-setting rally for the third consecutive day.
- Dangote Cement (DANGCEM) led the market gainers with a 10% increase, closing at NGN 474.10 per share.
- Inflation remains elevated at 34.80% as of January 2025, impacting consumer purchasing power.
- The Nigerian bond market remains strong, with the 2-year bond yielding 25.10% and the 5-year bond at 20.56%.
- The exchange rate closed at NGN 1,513 per USD on February 12, 2025, reflecting continued volatility in the foreign exchange market.
- The Central Bank of Nigeria (CBN) maintains its monetary policy rate at 27.50%, with lending rates averaging 18.56%.
Nigerian Stock Market Hits New High as ASI Continues Rally
The Nigerian stock market continued its bullish run, with the NGX All Share Index (ASI) reaching a fresh all-time high of 109,172.03 points on February 13, 2025. This marks the third consecutive day of record-breaking performance, driven by strong investor sentiment and robust corporate earnings. The index gained 1.25% from the previous trading session, adding 1,349.52 points.
Dangote Cement (DANGCEM) led the rally, surging by 10% to close at NGN 474.10. Other top gainers included Regency Alliance Insurance (REGALINS) and Sunu Assurances (SUNUASSUR), both posting 10% gains, alongside HMCALL (9.98%) and PZ Cussons Nigeria (9.96%). On the flip side, Golden Guinea Breweries (GOLDBREW) declined by 9.91%, followed by Linkage Assurance (LINKASSURE) at -6.76%, Eterna Plc (ETERNA) at -6.57%, Computer Warehouse Group (CWG) at -6.36%, and Chams Plc (CHAMS) at -3.75%.
Macroeconomic Landscape: Inflation and Interest Rates
The inflation rate stood at 34.80% as of January 2025, maintaining its upward trajectory. Rising food and energy prices continue to strain consumer spending. Meanwhile, the CBN has kept its benchmark interest rate at 27.50% in an effort to stabilize the economy. The interbank call rate remains elevated at 31.50%, reflecting tight liquidity conditions. Additionally, rising transportation costs and supply chain disruptions have exacerbated price pressures across various sectors. Analysts predict that inflationary pressures will persist in the near term unless significant policy interventions are made. Households and businesses alike are feeling the squeeze, leading to cautious spending patterns and dampened economic activity.
Bond Market Performance
Nigeria’s bond market showed stability, with the 2-year bond yielding 25.10%, the 3-year bond at 21.62%, and the 5-year bond at 20.56%. The long-term investment outlook remains positive, with a strong ‘buy’ sentiment observed in the daily and weekly indicators. Investor confidence has been bolstered by consistent demand from institutional investors, who see fixed-income securities as a hedge against inflation. The stability in yields also suggests that the market is pricing in expectations of continued monetary policy tightening. Additionally, foreign investor participation has increased, driven by the attractiveness of higher returns compared to global bond markets.
Foreign Exchange Market Trends
The foreign exchange market continues to experience fluctuations, with the naira closing at NGN 1,513 per USD on February 12, 2025. This represents a slight depreciation from the previous session, highlighting ongoing forex supply-demand imbalances. The CBN has reiterated its commitment to stabilizing the exchange rate through strategic interventions.
Sector Performance
The non-energy minerals and finance sectors emerged as the best-performing industries, bolstered by strong corporate earnings and investor confidence. Increased demand for industrial materials and a robust banking sector played key roles in driving their gains. In contrast, technology services and energy minerals lagged, affected by sector-specific headwinds. Challenges such as regulatory uncertainty and declining oil prices weighed on investor sentiment in these sectors. Additionally, a slowdown in tech adoption among businesses further contributed to the under performance of the technology services sector.
Conclusion
The Nigerian stock market remains in a strong bullish phase, with the ASI recording new highs. However, macroeconomic challenges such as inflation and currency volatility pose risks. Investors are advised to stay informed on market developments and consider sectoral trends in their investment decisions. Market analysts suggest that while short-term gains are enticing, a long-term strategy is essential to navigate the potential market corrections. Additionally, geopolitical factors and global economic trends could further influence market movements, necessitating a diversified investment approach. Given these dynamics, institutional and retail investors alike are urged to adopt risk management strategies to safeguard their portfolios.
