Nigeria: Banks’ Index Rises 5.1% as Investors Inject N49 Billion into Equities

For the first time in several months, the banking index on the Nigerian Exchange Limited (NGX) emerged as the top gainer, climbing by 5.1%. This surge was driven by significant price increases of 14.7%, 9.8%, and 7.9% in shares of United Bank for Africa PLC (UBA), FBN Holdings PLC, and Zenith Bank PLC, respectively.

In addition, the consumer goods and insurance indices saw gains of 2.3% and 1.8%, respectively, supported by price increases of 19.2%, 15.1%, and 24.2% in Nigerian Breweries, Unilever, and Veritas Kapital. Sovereign Trust Insurance also experienced an 8% rise by the end of the trading session.

The oil and gas index rose by 1%, buoyed by 60.5% and 1% gains in shares of Oando and Japaul Gold. In contrast, the industrial goods index fell by 3.7%, following 10% and 3.7% losses in BUA Cement and Berger Paints.

During the previous week, the market saw a bullish trend with three out of five trading sessions ending in gains. A total of 46 equities showed appreciation, surpassing the 40 equities that gained in the previous week.

Investor enthusiasm for MTN Nigeria, Oando, UBA, and Zenith Bank led to a 0.9% increase in the all-share index and market capitalization, closing the week at 98,592.12 and N55.97 trillion, respectively. The year-to-date (YTD) return rose to 31.9%, up from 30.7% the previous week.

Analysts at Cowry Asset Management Limited anticipate that the current upward trend and investor buying interest will continue, driven by the ongoing dividend earning season. “As we await half-year earnings reports from major banks, investors are likely to continue positioning for value, taking advantage of market pullbacks. We advise focusing on fundamentally strong stocks,” Cowry noted.

Cordros Capital also expects positive sentiment in the short term due to anticipated earnings from tier-1 banks and interim dividends. However, they caution that investor sentiment will be influenced by macroeconomic developments and movements in fixed-income market yields.

A detailed breakdown of last week’s trading revealed a turnover of 2.7 billion shares worth N49 billion across 47,451 transactions. This compares to 3.4 billion shares valued at N52 billion traded in 44,814 transactions the previous week.

The financial services sector led trading activity with 1.9 billion shares worth N31.9 billion across 23,467 deals, representing 74% of total equity turnover volume. The oil and gas sector followed with 229.7 million shares valued at N7.4 billion in 4,021 deals, while the ICT sector placed third with 113.9 million shares worth N3 billion in 4,260 deals.

Trading in the top three equities—Access Holdings PLC, Veritas Kapital Assurance PLC, and United Bank for Africa PLC—accounted for 756 million shares valued at N10.7 billion across 6,985 transactions, contributing 28.2% to total equity turnover volume.

Exchange Traded Products (ETPs) saw 20,375 units valued at N5.9 million traded in 148 deals, compared to 21,051 units worth N2.2 million in 97 deals the previous week. Additionally, 184,955 units of bonds worth N187.8 million were traded in 40 deals, up from 63,807 units valued at N61.5 million in 37 deals the week before.