Investors on the Nigerian Exchange (NGX) recorded a substantial gain of N4.1 trillion in market capitalisation in the month of May, marking one of the most robust performances in recent months. The market rally was fueled by a combination of positive macroeconomic signals, investor sentiment, and strategic positioning by both local and foreign institutional investors.

Market capitalisation of listed equities, which closed the month of April at N66.5 trillion on April 30, 2025 closed yesterday, May 29, 2025 at N70.5 trillion, adding N40.1trillion or 5.7 per cent. Also, the All-Share Index, which measures the performance of listed equities, rose by 6017.23 points from 105.800.85 points to 111.818.08.

During the period, inflation showed signs of easing while GDP growth projections were revised upward as the Central Bank of Nigeria (CBN) continued its monetary tightening to stabilise the naira. Additionally, the gradual clearance of foreign exchange backlogs and a more stable FX market reassured both local and foreign investors.

Corporate earnings also played a pivotal role. First-quarter financial results from major companies, particularly in the banking, telecoms, and consumer goods sectors were largely positive. These earnings reports, coupled with strong dividend declarations, especially from Tier-1 banks, encouraged investors seeking returns in a volatile macro environment.

Domestic investors were a major force behind the rally. With foreign portfolio investment still on the path to recovery, local institutional investors such as pension funds and asset managers increased their market activity. Retail investors also became more active, aided by easier access to trading platforms and growing interest in capital market opportunities.

The latest Domestic and Foreign Portfolio Investment (FPI) report released by the NGX last month indicated that as of April 30, domestic transactions had reached N1.8 trillion, while foreign trades totaled N877 billion, reinforcing the growing influence of local players in Nigeria’s capital markets.

In addition, recent government reforms and clearer communication from fiscal and monetary authorities gave investors a sense of stability and direction. The Central Bank’s efforts to coordinate with the Ministry of Finance, and the Securities and Exchange Commission’s emphasis on investor protection and market transparency, further strengthened investor sentiment.

Sectoral rotation also contributed to market performance. Investors began shifting capital into sectors that were previously undervalued, such as industrials and real estate, while engaging in bargain hunting for stocks with strong fundamentals but lagging valuations.

Within the period, several equities listed on the NGX recorded strong month to date appreciation, reflecting heightened investor confidence driven by improved macroeconomic indicators and robust corporate earnings.

Some of the top gainers include Aradel Holdings Plc, which saw a significant price increase of 9.98 per cent over the course of the month. University Press Plc (UPL) also posted an impressive gain of 9.86 per cent, buoyed by renewed investor interest and a return to profitability.

ABC Transport Plc (ABCTRANS) experienced an 8.43 per cent rise in share price, while Linkage Assurance Plc (LINKASSURE) appreciated by 8.16 per cent. These gains suggested growing investor optimism in the transportation and insurance sectors, respectively. C&I Leasing Plc (CILEASING) recorded a 7.32 per cent increase in May, reflecting strong sentiment in financial services and leasing, and McNichols Plc ended the month up by 6.99 per cent, driven by improved trading activity and favorable market conditions.

Operators said sustaining this momentum will depend on the continuation of stable and credible economic policies.

Research Analyst at Cowry Asset Management, Charles Abuede, said the Nigerian equity market experienced renewed momentum in May, driven by a combination of strong corporate earnings, attractive dividend declarations, and improving macroeconomic fundamentals.

According to him, these factors significantly boosted investor confidence, translating into broad-based gains across the market.

Abuede noted that the more stable foreign exchange environment supported activity in the consumer goods sector, which saw heightened buying interest and a rebound in valuations.

He pointed out that stocks from small to large capitalisation attracted attention, especially companies like Honeywell Flour Mills and Beta Glass helping to elevate overall market sentiment.

The analyst emphasised that equities remained relatively undervalued, offering compelling entry points for investors seeking long-term value.

He pointed out that the continued moderation in inflation further encouraged a reallocation of funds from the money market into equities, contributing to sustained market growth throughout the month.

He added that the combination of earnings strength, policy stability, and macroeconomic improvement suggests that the Nigerian stock market is gaining the attention of discerning investors, who are positioning themselves ahead of a potential longer-term rally.

Investment Banker and Stockbroker, Tajudeen Olayinka, said stock prices are low, noting that some stocks are currently trading below their intrinsic or theoretical values.