By Taiye Olayemi & Expert Market Analysis
Lagos, Jan. 2, 2025 – The Nigerian Exchange (NGX) kicked off the 2025 trading year on a decisively bullish note, extending the positive momentum from the previous year. Investors collectively gained N561 billion on the first trading session, signaling sustained confidence and setting an optimistic tone for the year ahead.
The market’s performance was not a fluke but a broad-based rally. The All-Share Index (ASI), the benchmark indicator, rose by 0.57% or 879.33 points to close at 156,492.36. More significantly, the total market capitalisation—the value of all listed companies—climbed from N99.376 trillion to N99.937 trillion. This movement is a critical gauge of overall investor wealth and market health.
What Drove the Rally? A Closer Look at the Gainers
The market’s strength was underscored by overwhelming positive breadth: 53 advancing stocks versus only 10 decliners. Leadership came from both speculative and fundamentally driven sectors:
- Top Gainers: FTN Cocoa Processors, ABC Transport, Mutual Benefits Assurance, and Deap Capital Management all hit the maximum 10% daily price appreciation ceiling. This often indicates intense buying pressure or positive sentiment following company-specific news.
- Sector Insight: The prominence of insurance (Mutual Benefits, Linkage Assurance, Lasaco) and agriculture/processing (FTN Cocoa, Aluminium Extrusion) stocks among the leaders suggests rotational buying into sectors perceived to have strong growth potential or attractive valuations as the new year begins.
The Other Side of the Coin: Understanding the Losers
While the market was broadly positive, some stocks faced selling pressure. Abbey Mortgage Bank led the decliners, down 6.25%. Notably, heavyweight Seplat Energy fell 3.43%, a move that could reflect profit-taking after previous gains or sector-specific headwinds in the oil & gas sector. This mix highlights that even in a bullish market, stock selection remains paramount.
Trading Activity: Volume vs. Value – A Telling Divergence
A deeper analysis of market activity reveals a fascinating trend: increased participation but a shift in focus. The number of deals executed surged by over 44% to 40,245 transactions, indicating higher retail or speculative trader engagement. However, the total value traded dipped to N24.9 billion from N35.13 billion in the last 2024 session, while volume also fell.
This paradox—more deals but lower total value—often suggests increased trading in lower-priced stocks (like Chams, which led volume with 120.3 million shares) compared to block trades in high-capitalization stocks. It points to a market where broad sentiment is positive, but major institutional money may have been less active on this first day.
Context and Implications for Investors
This strong opening follows a public holiday on January 1st and builds on the NGX’s performance as one of the world’s best-performing markets in 2024. The “January Effect,” a seasonal pattern where stocks rise in the first month, may be in play, often fueled by new capital allocations and optimistic year-ahead portfolios.
For investors, this opening session offers several insights:
- Momentum is Intact: The bullish trend from 2024 has carried over, reducing immediate fears of a sharp reversal.
- Market Breadth is Healthy: Gains were not concentrated in a few mega-caps but spread across numerous companies, a sign of a healthier rally.
- Watch for Sustainability: The key question is whether this is a one-day surge or the start of a sustained trend. Investors should monitor if the momentum spreads to banking and industrial heavyweight sectors in the coming sessions.
In summary, the Nigerian stock market’s N561 billion opening-day gain is a powerful psychological and financial boost. It reflects a combination of continued positive sentiment, strategic positioning for the new year, and vibrant trading activity. While it sets a hopeful stage, seasoned investors will watch the coming weeks for confirmation of this strength and the emergence of sustainable leadership sectors for 2025.
(Source: NAN) Edited by Olawunmi Ashafa & Expert Analysis Team.
