The All-Share Index of the Nigerian Exchange Limited recorded a 1.22% increase, closing at 103,598.30 points. This rise was accompanied by a market capitalisation growth from N62.8 trillion to N63.6 trillion. The banking sector played a pivotal role in this performance, with the NGX Banking Index surging by 4.09%. Key contributors to this surge included Fidelity Bank, United Bank for Africa , Zenith Bank, and Access Holdings, each posting gains exceeding 4.5%.
Analysts attribute this positive momentum to several factors. The Central Bank of Nigeria's directive for banks to bolster their capital bases has prompted financial institutions to seek fresh equity through various means, including public offerings and mergers. This move aims to enhance the capital adequacy of lenders and support the government's vision of achieving a N1 trillion economy by 2030. Consequently, investor appetite for bank stocks has heightened, anticipating potential mergers and acquisitions within the sector.
Foreign capital inflows have also played a significant role in the market's rebound. In the first half of the year, Nigeria attracted $6 billion in foreign capital, a substantial increase from $2.16 billion during the same period the previous year. This surge is largely due to the return of portfolio investors following the relaxation of currency controls by the Central Bank. Major sources of this capital included the United Kingdom and the Netherlands, with significant investments directed towards Nigeria's banking sector.
The depreciation of the naira, influenced by macroeconomic reforms, has further bolstered market performance. As the currency adjusted to more realistic exchange rates, Nigerian assets became more attractive to foreign investors seeking higher yields. This development, coupled with increased crude oil revenues, has contributed to reducing the country's fiscal imbalance and enhancing investor confidence.
New listings on the NGX have also invigorated trading activities. Companies such as Geregu Power, Transcorp Power, Aradel Holdings, and BUA Foods have expanded the range of blue-chip stocks available to investors. These additions have not only diversified the market but also increased its depth, providing more opportunities for investment.
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