Key Takeaways:
- The NGX All Share Index declined by 1.02%, closing at 108,053.94 points.
- The NGX 30 Index also fell 0.90%, closing at 4,012.93 points.
- Top performers include ROYAL EXCHANGE PLC (ROYALEX) with a 10.0% gain.
- Worst performer was BUA FOODS PLC (BUAFOODS), down 10.0%.
- Inflation remains high at 34.80%, impacting investor sentiment.
- Nigeria’s 2-Year Bond Yield increased to 25.746%, indicating strong demand for fixed-income securities.
- The Naira closed at ₦1,515/USD, reflecting continued FX pressures.
The Nigerian stock market witnessed a bearish sentiment on February 14, 2025, with the NGX All Share Index (ASI) closing at 108,053.94 points, reflecting a 1.02% decline from the previous session’s 109,172.03 points. The NGX 30 Index followed a similar downward trajectory, dropping 0.90% to 4,012.93 points. Trading volume remained robust, with over 478 million shares changing hands.
Market Leaders and Laggards
Top 5 Performers:
- ROYAL EXCHANGE PLC (ROYALEX): +10.0% (₦0.99)
- UPDC PLC (UPDC): +9.88% (₦3.78)
- THE INITIATES PLC (TIP): +9.76% (₦4.05)
- RED STAR EXPRESS PLC (REDSTAREX): +9.09% (₦6.00)
- COMPUTER WAREHOUSE GROUP PLC (CWG): +7.41% (₦8.70)
Worst 5 Performers:
- BUA FOODS PLC (BUAFOODS): -10.0% (₦373.50)
- DAAR COMMUNICATIONS PLC (DAARCOMM): -9.09% (₦0.70)
- ARADEL HOLDINGS (ARADEL): -6.9% (₦530.00)
- LIVESTOCK FEEDS PLC (LIVESTOCK): -6.09% (₦6.01)
- BETA GLASS PLC (BETAGLAS): -5.74% (₦95.20)
Sector Analysis
Sectors that performed well:
- Technology Services
- Transportation
- Commercial Services
- Communications
- Consumer Durables
Sectors that underperformed:
- Energy Minerals
- Consumer Services
- Process Industries
- Producer Manufacturing
- Utilities
Macroeconomic and Fixed Income Market Overview
The Nigerian bond market experienced mixed reactions, with the 2-Year Bond Yield increasing by 2.59% to 25.746%, reflecting a shift towards fixed-income investments amid economic uncertainty. The 3-Year Bond Yield declined by 1.80% to 21.228%, signaling some caution among investors in medium-term securities. The increase in the 2-Year Bond Yield suggests that investors are seeking higher returns amid rising inflationary pressures. Meanwhile, the drop in the 3-Year Bond Yield could indicate a preference for short-term bonds over medium-term securities. Overall, the bond market remains a key indicator of investor sentiment regarding Nigeria’s economic stability and monetary policy outlook.
Inflation remains a significant concern, recorded at 34.80% for December 2024, as per the Central Bank of Nigeria (CBN). This high inflation rate has pressured interest rates, with the Monetary Policy Rate (MPR) set at 27.50% to curb excess liquidity. The Treasury Bill 91-Day Rate stands at 18%, offering attractive risk-adjusted returns for short-term investors. The persistent inflationary pressures have also eroded consumer purchasing power, affecting domestic demand and business profitability. Additionally, rising production costs due to inflation are impacting corporate margins, leading to cautious spending patterns among businesses.
Foreign Exchange Market
The Nigerian Naira showed continued weakness in the foreign exchange market, closing at ₦1,515 per USD on February 13, 2025, slightly depreciating from ₦1,513/USD the previous day. The average interbank call rate surged to 31.50%, reflecting liquidity pressures in the financial system. The spot price of Nigeria’s reference crude oil stood at $74.72 per barrel, which remains a crucial factor in the country’s external reserves and currency stability. The depreciation of the Naira highlights persistent concerns over foreign capital inflows and rising import costs. Market analysts suggest that increased demand for foreign currency, coupled with declining foreign reserves, is exacerbating the currency pressures. Additionally, the central bank’s interventions in the forex market have been met with mixed results, leading to continued volatility in exchange rates.
Investment Outlook
Given the prevailing market conditions, investors are advised to:
- Diversify portfolios across strong-performing sectors such as Technology, Transportation, and Communications.
- Consider fixed-income securities like the 2-Year bond (25.746% yield) for stable returns.
- Monitor inflation trends and exchange rate movements before making long-term equity investments.
- Stay cautious of stocks in energy, consumer services, and manufacturing due to economic uncertainties.
The overall sentiment in the market remains mixed, with short-term bearishness but long-term optimism, especially for fundamentally strong stocks. Investors should remain vigilant, considering macroeconomic trends and sectoral shifts before making investment decisions.