NGX All-Share Index Smashes 200,000 Barrier for First Time

The Nigerian Exchange Limited recorded a significant milestone last week as its all-share index breached the psychological 200,000-point threshold for the first time, settling at 201,156.85 points amid broad-based gains across key sectors and sustained institutional buying interest.

The industrial goods sector emerged as the week’s best performer, posting a 9.67 per cent gain to claim the top position among sectoral indices for the first time in several months. This surge was driven by strong price appreciation in major manufacturing and construction stocks, including BUACement, which rose by 21 per cent, alongside notable gains in John Holt, Premier Paints, Berger Paints and Lafarge Africa.

The banking sector maintained its position as a preferred destination for institutional investors, with the banking index advancing 4.31 per cent on the back of sustained buying interest. Zenith Bank led the sector’s rally with a 14.6 per cent gain, while United Bank for Africa, FirstHoldCo, Wema Bank and AccessCorp also recorded significant price appreciation, reflecting continued investor appetite for fundamentally strong and liquid banking stocks.

Market capitalisation mirrored the positive sentiment, climbing to N129.13 trillion from the previous week’s level, representing a weekly gain of N1.77 trillion. Year-to-date returns now stand at 29.27 per cent for the all-share index and 29.94 per cent for market capitalisation, underlining the sustained bullish momentum that has characterised the Nigerian equity market throughout the year.

Trading activity strengthened significantly during the review period, with total volume traded jumping by 173.6 per cent week-on-week to reach 9.05 billion units. Transaction value rose correspondingly by 62.39 per cent to N267.33 billion, indicating increased investor positioning driven by sector rotation and renewed confidence in fundamentally sound equities.

The all-share index’s 1.39 per cent weekly gain came despite hitting an intra-week high above 202,000 points, as profit-taking activities towards the end of the trading week tempered the rally. The 200,000-point mark, long anticipated by market analysts as a critical psychological threshold, now serves as a key support level for further price action.

However, market breadth remained weak as four of the six tracked sectoral indices closed in negative territory, highlighting a divergence between strong-performing stocks concentrated in the industrial and banking sectors and underperformers in commodity, energy and consumer-facing industries.

The commodity index led the losers’ chart, declining by 4.91 per cent due to significant losses in Presco, which recorded the steepest individual stock decline of 18.4 per cent, and Aradel Holdings. The oil and gas sector followed closely, dropping by 4.78 per cent amid weakness in Oando and Eterna, the latter of which fell by 12.8 per cent during the week.

The insurance and consumer goods indices posted marginal declines of 0.42 per cent and 0.1 per cent respectively. International Energy Insurance, International Breweries, Regal Insurance, Nigerian Breweries, Tantalizers and NASCON Allied Industries all experienced sell-offs as investors rotated capital away from defensive and consumer-facing stocks towards higher-yielding industrial and financial counters.

Individual stock performance presented a stark contrast between winners and losers. John Holt emerged as the week’s top gainer with a 25.4 per cent increase, followed by BUACement’s 21 per cent gain and Premier Paints’ 20.6 per cent rise. Learn Africa rounded out the top five gainers with a 13.3 per cent advance, all buoyed by sustained buying momentum and positive sentiment around their respective sectors.

On the losing end, DAAR Communications fell by 13.6 per cent, Red Star Express declined by 10 per cent, and Omatek dropped by 9.2 per cent, reflecting profit-taking activities and weak investor sentiment in those particular stocks.

The Nigerian Exchange Limited has experienced a remarkable year, with the all-share index gaining nearly 30 per cent since January. This performance comes against the backdrop of Nigeria’s complex macroeconomic environment, characterised by elevated inflation rates, foreign exchange volatility and monetary policy tightening by the Central Bank of Nigeria. Despite these headwinds, the equity market has attracted significant domestic and foreign portfolio investment, particularly in banking stocks seen as beneficiaries of higher interest rates and industrial companies positioned to benefit from import substitution policies.

The industrial goods sector’s resurgence as the week’s top performer marks a notable shift in investor focus. For much of the year, banking stocks have dominated market gains, supported by strong earnings growth driven by higher net interest margins in a rising rate environment. The rotation into industrial stocks suggests growing investor confidence in Nigeria’s manufacturing and construction sectors, possibly reflecting anticipation of increased infrastructure spending and improved business conditions.

Cement manufacturers, which constitute a significant portion of the industrial goods index, have been particular beneficiaries of this renewed interest. BUACement and Lafarge Africa, two of Nigeria’s largest cement producers, have seen their share prices appreciate substantially amid expectations of sustained demand from both public infrastructure projects and private real estate development. The sector has also benefited from government policies aimed at reducing cement imports and promoting local production.

Ambrose Omordion, Chief Research Officer of Investdata Consulting Limited, provided technical analysis of the market’s outlook, stating that “the technical outlook for the market remains strongly bullish, supported by robust price action, expanding trading volumes and sustained institutional participation.”

He noted that “the All-Share Index has broken key resistance levels and is holding above the 200,000 mark, which now serves as a critical support level.”

Omordion added that “while intermittent pullbacks or sideways movements may occur in the near term due to overbought conditions, such corrections are expected to be mild and could present attractive entry opportunities for investors targeting fundamentally strong stocks.”

According to the analyst, “key support levels are positioned around 200,000 and 198,500 points, while immediate resistance is seen within the 205,000 to 207,000 range, with a breakout above this band likely to trigger another rally phase.”

The Nigerian Exchange Limited, formerly known as the Nigerian Stock Exchange before its demutualisation and renaming in 2021, operates as Africa’s second-largest stock exchange by market capitalisation after the Johannesburg Stock Exchange. The exchange has undergone significant reforms in recent years, including the introduction of new indices, improved trading technology and enhanced regulatory frameworks aimed at deepening market liquidity and attracting greater foreign investment.

The current rally builds on a multi-year recovery that began after the market bottomed in 2020 during the global coronavirus pandemic. Since then, the exchange has benefited from improved corporate earnings, relatively stable political conditions following the 2023 general elections, and growing recognition of Nigerian equities as attractive investment destinations within the African continent.

Banking stocks have been consistent performers throughout this period, supported by the Central Bank of Nigeria’s aggressive monetary tightening cycle, which has seen the benchmark interest rate rise from 11.5 per cent in 2022 to current levels above 27 per cent. This rate environment has expanded net interest margins for commercial banks, translating into stronger profitability and attractive dividend yields that have drawn both retail and institutional investors.

The industrial goods sector’s strong performance last week also reflects structural changes in Nigeria’s economy. Government initiatives to reduce import dependence, particularly in construction materials and consumer goods, have created opportunities for domestic manufacturers. Additionally, the removal of fuel subsidies and ongoing foreign exchange reforms, while initially disruptive, are gradually creating a more market-driven economic environment that rewards efficient producers.

However, challenges remain for the broader market. The weak performance of the consumer goods sector, evidenced by losses in International Breweries, Nigerian Breweries and NASCON Allied Industries, reflects persistent pressure on household purchasing power amid high inflation. Nigeria’s inflation rate has remained above 20 per cent for much of 2024 and into early 2025, eroding consumer spending capacity and creating margin pressures for companies in discretionary sectors.

The commodity and oil and gas sectors’ declines also highlight ongoing challenges in Nigeria’s energy industry. Despite being Africa’s largest oil producer, Nigeria has struggled with production constraints, pipeline vandalism and underinvestment in upstream operations. These factors continue to weigh on the performance of oil and gas stocks, even as global energy prices remain relatively elevated.

Market analysts generally expect the Nigerian equity market to maintain its positive trajectory in the near term, barring external shocks or significant adverse policy developments. The combination of attractive valuations relative to emerging market peers, improving corporate governance standards, and Nigeria’s young, growing population continues to underpin the investment case for Nigerian equities.

The break above the 200,000-point level represents a significant psychological milestone that market participants had long anticipated. Whether the index can sustain this level and push towards the 205,000 to 207,000 resistance range identified by analysts will depend on several factors, including the continued strength of banking and industrial stocks, overall macroeconomic stability, and the ability of companies to deliver earnings growth that justifies current valuations.