Investor Confidence Lifts NGX as Rate Cut Expectations Grow

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Olori Uwem

Well-Known Member
Mar 18, 2024
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Investor Confidence Lifts NGX as Rate Cut Expectations Grow

The Nigerian stock market continued its strong bullish momentum last week — and for good reason. Recent macroeconomic data and policy moves have renewed optimism among investors, leading to fresh inflows into equities.

1️⃣ Inflation Eases, Boosting Market Sentiment

The National Bureau of Statistics (NBS) reported a drop in inflation to 18.02% in September 2025, down sharply from 22.12% in August. This marks one of the most significant declines in recent months, signaling that the Central Bank of Nigeria’s (CBN) tightening measures are starting to bear fruit.

2️⃣ CBN Reduces Benchmark Interest Rate (MPR)

The CBN lowered the Monetary Policy Rate (MPR) from 27.5% to 27%, reflecting growing confidence in inflation moderation.
Analysts are already predicting another possible cut at the next Monetary Policy Committee (MPC) meeting — a move that could further stimulate equity investments and corporate borrowing.

3️⃣ Market Gains Over ₦1.26 Trillion in One Week

The Nigerian Exchange (NGX) recorded an impressive upswing as:
• Market capitalization rose to ₦94.56 trillion (from ₦93.29 trillion the previous week).
• All Share Index (ASI) climbed 1.4% to close at 148,977.64 points.

Investors are positioning themselves ahead of Q3 2025 earnings releases, while also reacting positively to improving macroeconomic signals.

4️⃣ Top Performers of the Week

Several large-cap stocks led the rally:
• Dangote Cement +4.4%
• BUA Foods +3.2%
• Stanbic IBTC +8.3%
• WAPCO +4.3%

These movements helped lift the Month-to-Date (MtD) and Year-to-Date (YtD) returns to 4.4% and 44.7%, respectively — showing sustained investor confidence in the market.

5️⃣ Sectoral Performance Mixed but Largely Positive
• Industrial Goods Index: +2.8%
• Insurance Index: +2.6%
• Consumer Goods Index: +1.9%
• Banking Index: -0.1% (slight dip)
• Oil & Gas Index: unchanged

While trading volume increased by 5.9% week-on-week, trading value dropped by 15.5%, indicating selective but strategic participation by institutional investors.

6️⃣ Analysts’ Outlook

According to Cordros Research, sentiment this week is expected to remain “cautiously positive” — driven by anticipation of solid Q3 earnings and potential monetary easing.
Stocks on analysts’ watchlist include WAPCO, International Breweries, Nigerian Breweries, and Guinness Nigeria.

Takeaway for Investors

The easing inflation and potential rate cuts are strong bullish signals for equities. Investors are advised to:
✅ Reassess their portfolios ahead of Q3 results.
✅ Watch for fundamentally strong companies likely to post resilient earnings.
✅ Stay alert for policy shifts at the next CBN meeting — as another rate cut could further drive equity demand.