THE total value of listed companies on the Nigerian Exchange Limited (NGX) surged to over N72 trillion last week, reflecting sustained investor confidence and positive market sentiment.

This marks a significant gain from the N62.76 trillion recorded at the beginning of the year, translating to nearly N10 trillion in capital appreciation.

As of Thursday, June 6, the NGX All-Share Index (ASI) had climbed to 114,616.75 points, up from 102,926.40 at the start of 2024, delivering a year-to-date (YTD) return of 11.36 per cent.

The market closed on Thursday ahead of the public holiday declared for the Muslim Eid festival on Friday, June 7.

Domestic investors dominate trading activity

Market data continues to show a notable decline in foreign investor participation, with domestic investors increasingly taking the lead.

As of April, data shows domestic investors accounted for approximately 83 percent of total market transactions, significantly outweighing foreign participation, which stood at just 13 per cent.

The data further shows that the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by about 74 per cent.

Banking stocks lead sectoral performance

A look at how different sectors of the stock market performed between January 2 and  June 5 shows that banking stocks recorded the highest gains. Their index rose by 400.19 per cent, jumping from 1,084.52 basis points to 5,424.62 basis points.

Consumer goods stocks followed with a 346.47 per cent increase, rising from 1,731.67 to 7,731.16 points.

Industrial sector stocks also performed strongly, gaining 139.02 per cent to reach 8,538.14 points from 3,572.17 points.

Oil and gas stocks saw more modest growth, up by 20.16 per cent from 2,712.06 to 3,258.87 points.

In contrast, insurance sector stocks declined by 1.43 per cent, dropping slightly from 718.00 to 707.76 points.

Analysts cite confidence, reforms, dividend season as growth drivers

Market analysts link the overall bullish performance to increased local participation, corporate earnings resilience, and ongoing market reforms. David Adonri, Executive Vice Chairman at Highcap Securities Limited, noted that technology deployment on the NGX is improving access and easing investment processes.

“The technology deployed by NGX in the primary market is increasing accessibility to the market and enhancing ease of investment in the capital market,” he said.

He also pointed out that foreign investor interest, though currently limited, is gradually recovering. 

“The dual roles of the capital market, capital formation, and as an investment outlet, are being fulfilled. As a result, the volume of transactions done by both domestic and foreign investors is increasing. The economy is benefiting tremendously from this positive development,” Adonri added.

Patrick Ajudua, President of the New Dimension Shareholders Association, believes the rally is also driven by dividend season as investors are positioning to benefit from dividend payments. Even with foreign investors pulling back, local institutions – local portfolio managers, mutual funds, and pension funds-  are stepping up. 

He added that persistent FX issues have discouraged some foreign investors but expects the situation to improve with ongoing reforms.

“One of the fundamental decreases in foreign investors participation is the issue of repatriation of proceeds and foreign exchange accessibility. I want to believe that it is being handled by appropriate government agencies because we still need foreign investors in our market,” Ajudua pointed out.

He stressed that the continuous participation of local investors is a demonstration of unwavering confidence in the Nigerian capital market and a sign of an improved economy.

“The foreign exchange rate is getting stable, which will aid financial planning and improve returns on investment,” Ajudua maintained.

Innocent Peter Nwokocha, Chairman of the Noble Shareholders Association (Abuja branch), told The ICIR that the major driving force behind investors positive sentiments in the market can be traced to the lucid dynamics of the exchange.

For him, the continuous drop in the number of foreign investors would create more opportunities for the local investors because the level of return on investment in Nigeria is high and attractive.

“The continued increase in domestic investors signifies growth and overwhelming confidence in both the market and the economy.

“The level of awareness in the stock market is creating a positive spiral effect on the economy as investors are continually smiling at the Banks to either buy or sell. The advantages are inexhaustible and unquantifiable,” Nwokocha added.

What to expect in the coming weeks 

Analysts at Cowry Asset Management expect the prevailing trend to persist in the near term as investors continue to realign their portfolios in anticipation of further earnings releases and macroeconomic data, particularly the first quarter of 2025 gross domestic product (GDP) numbers.

“The sustained momentum in the market is likely to be driven by a combination of sectoral rotation strategies and positive sentiment surrounding the resilience of the domestic economy,” they stated in their weekly report.

The Cowry researchers, however, anticipate that trading may remain moderate as some players adopt a cautious stance ahead of fresh catalysts.

“We maintain our guidance for investors to stay positioned in fundamentally strong counters with solid earnings prospects and defensive characteristics, particularly in light of macroeconomic uncertainty and evolving liquidity dynamics,” they added.