Highlights:
- NGX All Share Index closed at 108,497.40, declining 0.07%.
- Top-performing stocks included CHAMPION BREWERY PLC.
- Naira fluctuated, closing at 1,502.50 per USD.
- Bond yields strengthened, with the 2-Year bond rising 3.24%.
- Inflation reported at 34.8% in December 2024.
- Monetary policy rate remained at 27.5%.
- Oil traded at $80.76 per barrel.
Nigerian Market Performance: Stocks, Forex, and Bonds in Focus
The Nigerian financial markets remained active on February 21, 2025, as investors navigated various economic indicators. The equities market saw marginal declines, while foreign exchange and fixed-income instruments reflected mixed sentiments. Key macroeconomic indicators, including inflation, interest rates, and crude oil prices, also played a role in shaping market trends. Investor sentiment was influenced by global economic developments, including shifts in U.S. Federal Reserve policies and regional trade agreements. Additionally, sector-specific developments, such as policy adjustments in the banking and energy sectors, contributed to volatility. Analysts anticipate continued fluctuations as policymakers assess the impact of inflation and currency devaluation on capital flows.
Stock Market Performance
The NGX All Share Index (ASI) closed at 108,497.40, down 0.07% from the previous session. The trading volume stood at 315,721,716 shares, reflecting a cautious investor sentiment. The NGX 30 Index followed a similar trend, closing at 4,036.47, down 0.08%. Despite the overall market retreat, some stocks delivered notable gains. The decline was largely driven by profit-taking in key blue-chip stocks, particularly in the financial and industrial sectors. Market analysts noted that foreign investors remained on the sidelines due to uncertainties in monetary policy direction. Additionally, increased sector rotation was observed, with investors favoring defensive stocks over high-growth equities.
Top Performers:
- CHAMPION BREWERY PLC led the gainers, benefiting from positive investor sentiment in the consumer non-durables sector.
- ABBEY BUILDING SOCIETY PLC saw a 5.57% jump, trading at NGN 3.60 per share, supported by strong revenue growth of 58.84% YoY.
- ASSOCIATED BUS COMPANY PLC declined 4.65%, reflecting negative investor sentiment in the transportation sector.
From a technical perspective, short-term indicators suggested a “strong buy” sentiment across most indices, with a positive year-to-date performance of 5.41%.
Foreign Exchange Market
The naira witnessed fluctuations, closing at NGN 1,502.50 per USD after reaching an intraday high of NGN 1,509.00. The market recorded an average rate of NGN 1,501.03, indicating volatility as demand for the dollar persisted. The pressure on the naira was largely attributed to increased demand for foreign currency from importers and businesses seeking to hedge against inflation. Additionally, concerns over dwindling foreign exchange reserves have prompted speculators to drive up demand in parallel markets. Analysts predict that further interventions by the Central Bank could provide temporary relief, but sustained stability will depend on improved foreign direct investment and export earnings.
Macroeconomic factors influencing the forex market included:
- Money supply (M3) at NGN 110.98 trillion (January 2025)
- Credit to other sectors at NGN 74.88 trillion
- Monetary Policy Rate at 27.5%, holding steady to curb inflationary pressures
The Central Bank of Nigeria (CBN) maintained its intervention measures, ensuring liquidity in the official market while tightening monetary policy to stabilize the naira. These measures included periodic forex interventions aimed at reducing speculative pressures and maintaining exchange rate stability. Additionally, the CBN implemented stringent capital control policies to curb excessive foreign exchange outflows, ensuring a more balanced demand-supply dynamic. The bank’s ongoing efforts signal a proactive approach in mitigating external shocks that could further destabilize the currency.
Fixed Income & Bond Market
Nigeria’s bond market witnessed gains, particularly in shorter-dated instruments. The 2-Year bond yield rose by 3.24%, closing at 26.106%, indicating increased investor interest. Similarly, the 3-Year bond saw a marginal gain of 0.24%. The demand for these bonds was driven by investors seeking safer assets amid ongoing market uncertainties. Additionally, higher yields attracted both domestic and foreign institutional buyers looking for stable returns. Analysts predict that if inflationary pressures persist, further yield adjustments in the bond market could be expected.
Investor sentiment in the bond market was shaped by:
- High 91-day Treasury bill rates at 18%.
- Monthly average prime lending rate at 18.49%.
- Inflation at 34.8% in December 2024, still elevated but expected to moderate in coming months.
Macroeconomic Outlook & Impact
Economic data signaled mixed trends. While inflation remained elevated, the Consumer Price Index (CPI) for January 2025 showed a decline to 24.48%, suggesting some easing of inflationary pressures. The GDP report for Q4 2024 was pending release, but the prior quarter had posted a 10% growth rate, indicating strong economic expansion. Analysts expect the growth momentum to continue, fueled by increased government spending on infrastructure and industrial expansion. However, potential supply chain disruptions and currency volatility pose risks to sustained GDP growth. Investors are closely monitoring fiscal policy adjustments to gauge the long-term trajectory of economic stability.
Crude oil prices also played a significant role in market direction, with Nigeria’s reference crude trading at $80.76 per barrel in January 2025. This provided support to government revenue amid foreign exchange concerns. Analysts predict that if global demand remains stable, oil revenues will continue to cushion fiscal deficits, though geopolitical tensions could create price fluctuations.
Conclusion
The Nigerian market displayed resilience despite challenges in currency stability and inflation control. Equities saw selective gains, forex remained volatile, and bonds attracted investor interest due to rising yields. Going forward, market participants will closely watch monetary policy decisions and global commodity trends to assess investment opportunities in Nigeria’s financial markets. Additionally, the government’s fiscal policies and economic stimulus measures will play a crucial role in shaping investor confidence. The role of foreign direct investment remains pivotal, as regulatory stability and ease of doing business could attract further capital inflows. Analysts are also keeping an eye on geopolitical factors that may impact trade agreements and economic growth trajectories in the region.