Overview:
- NGX All Share Index closes at 108,568.50, down 0.04%.
- Abbey Building Society Plc gains 10% in a bullish financial sector.
- CPI drops significantly to 24.48% in January from 34.80% in December.
- Interest rates remain steady at 27.50%, impacting credit markets.
- Nigerian bond market shows strong gains in long-term securities.
The Nigerian stock market continues to exhibit resilience amid evolving macroeconomic conditions. The NGX All Share Index closed at 108,568.50 points on February 20, 2025, reflecting a slight decline of 0.04% from its previous level. Despite this marginal dip, overall market sentiment remains positive, with select stocks showing impressive gains. Investor confidence has been buoyed by strong corporate earnings in key sectors, driving heightened trading volumes. Financial analysts point to increased institutional participation as a critical factor in sustaining market stability. Additionally, the influx of foreign investment into select blue-chip stocks has provided further optimism for continued market strength.
Among the top performers, Abbey Building Society Plc saw a 10% increase in its share price, reaching NGN 3.41. The company’s strong financials, including a trailing 12-month revenue growth of 58.84%, contributed to its bullish trend. Its price-to-earnings ratio stands at 14.1, indicating a balanced valuation. Additionally, the company’s free cash flow remains strong, reinforcing its ability to weather economic uncertainties. Meanwhile, Associated Bus Company Plc held steady at NGN 1.29, reflecting investor confidence in the transportation sector. The company’s revenue growth of 76.46% year-on-year underscores its resilience and operational efficiency. Investors are closely monitoring its expansion strategies, which include fleet upgrades and diversification into logistics services.
The Nigerian economy demonstrated signs of cooling inflation, with the Consumer Price Index (CPI) dropping significantly to 24.48% in January from 34.80% in December. This sharp decline in inflation could signal a shift in monetary policy effectiveness, as the Central Bank of Nigeria (CBN) maintained the interest rate at 27.50%. This rate has remained unchanged since November 2024, following a series of hikes aimed at stabilizing inflationary pressures. The improved inflation outlook is largely attributed to a combination of increased agricultural output and better foreign exchange stability. Additionally, consumer confidence has shown slight improvements, reflecting optimism about future price stability. Analysts suggest that if this trend continues, the CBN may consider a more accommodative stance on interest rates in the coming months.
Liquidity conditions in Nigeria’s financial sector remain tight, with the inter-bank call rate averaging 31.50% as of February 18, 2025. The persistent tight liquidity environment has led to reduced lending activity among commercial banks, further constraining credit availability to businesses. Meanwhile, the naira remained volatile, closing at NGN 1,510 per USD on February 19, following fluctuations between NGN 1,504 and NGN 1,515 during intra-day trading sessions. Foreign exchange demand pressures continue to drive fluctuations, with import-dependent industries particularly affected by the unstable currency movements. Analysts suggest that interventions by the Central Bank, including targeted liquidity injections, may be required to stabilize market conditions in the near term.
The Nigerian bond market witnessed notable activity, with the 2-Year Bond closing at 25.238% yield and showing a strong buy signal in daily, weekly, and monthly trends. The 5-Year Bond, however, remains slightly weaker, closing at 20.348%. Despite this, long-term fixed-income instruments remain attractive for institutional investors seeking stable returns. Additionally, demand for sovereign bonds continues to be fueled by pension funds and asset managers looking for low-risk investments. Analysts note that the yield curve remains steep, indicating investor expectations of future monetary tightening. Given the persistent inflationary environment, the bond market is expected to remain a crucial hedge for risk-averse investors in the coming months.
On the corporate governance front, the Nigerian Exchange Group Plc announced a board meeting scheduled for February 25, 2025. The agenda includes the approval of the company’s audited financial statements for the year ended December 2024. Additionally, Nigerian Breweries Plc confirmed board changes, appointing Mrs. Olufunmilayo A. Akande as an Independent Non-Executive Director.
Overall, Nigeria’s financial markets continue to navigate a complex environment, balancing inflation concerns, interest rate stability, and corporate earnings performance. Market participants are also closely watching the government’s fiscal policies, particularly in response to global economic trends. Additionally, geopolitical developments and trade agreements could further influence investment flows into the country. Investors are advised to monitor upcoming corporate disclosures and macroeconomic indicators for strategic portfolio adjustments, while also keeping an eye on policy decisions that could impact the business landscape.
