Ruth Ibikunle
The Nigerian stock market last week closed on a bullish note with 4.31% growth. Year to date, the market has returned 27.84% with the All Share Index and Market capitalization at N131,585.66 points and N83.241 trillion respectively.
In a stock market review with Gilbert Ayoola, a seasoned capital market analyst, the following were discussed:
Excerpts:
• The stock market last week closed on a positive note with 4.31% growth. What is the outlook for the new week?
The Nigerian equities market closed last week on a strong bullish note, climbing 4.31%—it’s the best weekly performance in several months. This was powered by upbeat economic indicators, robust corporate earnings, and inflation easing to 22.22%, all of which boosted investor sentiment and attracted broad-based buying across key sectors.
Looking into the new trading week, momentum appears poised to continue, supported by positive macro tailwinds and bullish investor sentiment. However, investors should be mindful of possible mid-week profit-taking and sector rotation that could trigger short-term volatility. A constructive but selective approach is advised: focus on quality stocks, maintain a risk-managed stance, and keep an eye on evolving macroeconomic signals. Overall, the outlook remains favorable, especially for financials, industrials, and consumer goods.
• What is driving the current bull in the market?
The bullish sentiment is fueled by a combination of strong earnings and resilient economic data. Improved optimism around consumer confidence and broad sector participation, which is further propelled by market gains.
• What is driving the growth in BUA Cement, Nestle, Stanbic, and Dangote Cement?
In line with rising investors’ confidence and a bullish market tone, stocks like BUA Cement, Nestlé, Stanbic-IBTC, and Dangote Cement are gaining strong momentum.
BUA Cement — The growth is driven by robust revenue and volume expansion, supported by strategic pricing and increased production capacity. Coupled with high trading volume and technical “strong-buy” signals attracting momentum-led investors.
Nestlé Nigeria — Strong Q1 earnings jumped 61% to N294.9 billion, with gross profit soaring 144%, driven by solid consumer demand and improved cost efficiency with renewed investor optimism. EPS forecast indicates 60% CAGR, high ROE (~34%), and a fresh 52-week high reflect strong confidence in earnings growth.
Stanbic IBTC — The soiled position signaled broad-based financial performance, institutional backing, and a successful rights issue fueling share price appreciation. Subsequently, the year-to-date gain of +71%, led by a 17% rise in July, on the back of strong fundamentals backed by corporate investment banking and asset management performance sequel to robust institutional support and a successful N148 billion rights issue all signaling investor confidence.
Dangote Cement — The interest is based on strong earnings growth, export expansion, and operational scale underpinning investor confidence. The Q1 2025 revenue surged +21.7% (N995 billion), with EBITDA up 49%, due to strategic pricing and volume expansion. These fundamentals reflect solid business model and sector resilience, reinforcing the current bullish sentiment.
- How attractive is Access Holdings at N26.85?
Access Holdings at N26.85 offers a compelling value proposition. It trades at a discount to peers on a P/E basis despite strong earnings, rising asset base, and digital banking expansion. Consistent dividend payments add to its appeal in a yield-conscious environment. With market sentiment bullish, Access presents an attractive entry for medium to long-term investors.
• Is Nigerian Breweries a good buy at N74?
Nigerian Breweries at N74 appears cautiously attractive. The stock benefited from brand strength and market leadership, but rising input costs and FX pressures have continued to weigh on margins. While valuation seems fair amid recovery prospects, near-term upside depends on improved earnings visibility. It is suitable for long-term investors seeking value in a recovering consumer sector.
• NBS recently published that Nigeria’s inflation rate has dropped to 22.22%. What is the significance of this to the economy? How will this impact the stock market?
Nigeria’s headline inflation dropped to 22.22% in June, marking the third consecutive monthly decline and the lowest level since April 2023. This signals a potential shift in the inflation cycle, down from nearly 35% a year ago, driven by subsidy reforms, forex stabilisation, and improved food supply.
The sustained decline offers relief to consumers, restores purchasing power, and supports domestic demand. It also reflects greater macro stability, lowering import costs and easing pressure on households.
For the stock market, this creates a benign backdrop: easing cost pressures, rising consumer purchasing power, and a more stable macro outlook set the stage for further gains—especially with the market in a bullish posture.
While enhancing investor confidence. A continued downtrend open room for monetary easing, boosting credit flow and market liquidity. Sectors like consumer goods, financials, and industrials stand to benefit most.
• What are the stocks to watch?
As we enter into the week, these are likely stocks to watch: MTN, Zenith. Seplat, Nestlé, Fidelity, BUA Foods, Transcorp, Access, CWG, Presco, NSLTECH, GTCO, and many others.