Nigerian equities extend gains amid inflation, interest rate concerns

Onome Amuge

Nigerian stocks could extend their upward momentum, following a recent rebound,with the NGX All-Share Index (ASI) potentially aiming for a test of the 105,000 mark, a level not seen since the beginning of the month, according to an analysis by Daniel Wesonga, senior sales manager at Pepperstone.

In its analysis of the Nigerian stock market, Pepperstone noted that the recent uptrend was spurred by price gains in stocks such as Beta Glass, Access Holding, and Skyway Aviation Handling Company, with Beta Glass emerging as the top performer, appreciating by nearly 10 percent.

“The NGX All-Share Index reached a market cap of NGN 64.44 trillion, with the Banking and Consumer Goods sectors leading, up by 4.71% and 1.74% respectively. 

“However, the broader market also faced pressure from underperforming Consumer Services, Consumer Durables, and Distribution Services sectors. While key sectors perform well, weaknesses in others pose some downside risks,” the Australian based financial services company observed. 

Pepperstone foresees a continuation of the positive momentum in the Nigerian stock market, with the upcoming earnings season expected to drive investor interest and support further gains. However, short-term volatility may be experienced as investors lock in profits, which could affect the market’s immediate performance.

Despite concerns over high-interest rates in the fixed-income market, Pepperstone maintains a bullish outlook for the Nigerian stock market, underpinned by solid fundamentals such as improving economic conditions, robust corporate earnings, and the anticipated announcement of dividends.

With investors keenly awaiting the outcome of the Central Bank of Nigeria’s interest rate decision, Pepperstone stated that the current benchmark rate of 27.50 percent could have a major impact on the performance of Nigerian stocks.

According to Pepperstone’s analysis, high interest rates could potentially discourage investment in equities, making other asset classes more appealing due to the higher returns they offer. However, signs of stability or even a possible reduction in interest rates has been projected to provide a boost to the local stock market.