NGX | Nigerian Exchange - Monthly Equities Report - February 2024 : Global markets soared as local equities faltered

    In February, Nigerian equities halted its extended bullish run (its first monthly contraction in five months), with the NGX-ASI reporting a c.1.16% decline (vs +35.28% in January 2024). The bearish outing lowered the NGX-ASI below its historic high of 104,674 to 99,980 points and resulted in N650 billion moderation of market capitalization to N54.71 trillion. On specifics, the market's performance was primarily driven by the losses recorded in index-heavy names like DANGCEM (-10.00% MoM), MTNN (-20.68% MoM), BUACEMENT (-18.92% MoM), NESTLE (-17.43% MoM) and ACCESSCORP (-15.64% MoM).

    In our view, the sell-offs and weak domestic investors' sentiment reflected the following:

    1. The improvements in auction stop rates and the consequent increase in the effective yield of fixed-income securities
    2. Investors' reaction to some FY'23 earnings releases.

    On the first point, we note that at the 2024 debut sessions of the Monetary Policy Committee (MPC), which was held on the 26th – 27th of February, committee members decided to raise the benchmark policy rate by 400bps to 22.75% in a view to tighten liquidity and rein in inflation. This monetary tightening aligned with the improvements in auction stop rates, which enhanced the attractiveness of fixedincome securities and drove some rotation out of equities.

    Similarly, investors reacted negatively to the impact of currency devaluation on the financial performances of MTNN (-20.68% MoM), NESTLE (-17.43% MoM), WAPCO (-11.25% MoM) and BUACEMENT (-18.92% MoM), which all recorded significant FX losses and earnings contraction. Expectedly, the Industrial Goods (-13.33% MoM) recorded a contraction, given the impact of Naira's weakness on the earnings of its key constituents. Closely behind, the Insurance (-6.08% MoM) and Banking (-2.01% MoM) sectors contracted primarily due to losses reported in MANSARD (-14.68% MoM) and ACCESSCORP (-15.64% MoM), respectively. For the banks, these losses masked the gains in FBNH (+28.57% MoM) and GTCO (+7.03% MoM). We link the price movements in ACCESSCORP and FBNH to structural leadership changes, which may have stoked differing sentiments.

    Conversely, strong earnings in BUAFOOD (+39.77% MoM) and SEPLAT (+9.61% MoM) lifted the Consumer Goods (+16.45% MoM) and Oil & Gas (+4.14% MoM) sectors.


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    CardinalStone is a full service investment banking firm with a vision to build a world class investment banking firm of African origin; operating out of Lagos, Nigeria. The firm was incorporated in April 2008 and began operations in June 2008. CardinalStone is duly registered with the Securities & Exchange Commission in Nigeria to carry on business as an Issuing House, Fund Manager and Broker/Dealer The Firm's activities are carried out across five business units: Asset Management, Investment Banking, Private Equity, Securities Trading and the Business Support Group.
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