…Investor confidence soars as All-Share Index rises by 2.23%
By Charles Ebi
Nigerian stock market extended its winning streak to 11 consecutive days on Monday, powered largely by the Central Bank of Nigeria’s ,CBN, strategic reforms aimed at stabilising the naira and restoring investor confidence.
This is just as the Naira posted fresh gains against the United States dollar on Thursday, appreciating in both the official and parallel foreign exchange markets.
In the black market, currency dealers in Abuja said the naira was exchanged at ₦1,525/$1 for buying and ₦1,530/$1 for selling, an improvement from Wednesday’s closing rate of ₦1,538/$1, marking an ₦8.33 appreciation.
At the official Nigerian Foreign Exchange Market ,NAFEM, the naira held relatively stable, exchanging at ₦1,528/$1 on Thursday, a marginal appreciation from Wednesday’s rate of ₦1,529/$1.
This sustained rally reflects growing optimism about Nigeria’s economic prospects as currency stability and market-friendly reforms take effect.
The Nigerian All-Share Index ,ASI, rose 2.23% from 126,149 to 128,967, marking its longest continuous surge since March 2024 and boosting local-currency returns to 27% over the last 52 weeks.
This performance significantly outpaces the MSCI Emerging Markets Europe, Middle East, and Africa Index, which has gained only about half as much over the same period.
Under the leadership of the CBN Governor, Olayemi Cardoso, the apex bank’s comprehensive approach to foreign exchange ,FX, market stabilisation has been at the heart of this impressive turnaround.
Since late 2024, the Central Bank has introduced several reforms designed to improve liquidity, enhance transparency, and curb volatility in the FX market, long a source of uncertainty for investors.
Key among these reforms is the Electronic Foreign Exchange Matching System ,EFEMS, a digital platform launched to facilitate transparent and efficient trading of foreign currency. EFEMS has improved price discovery and eliminated significant distortions caused by parallel markets.
Alongside this, the CBN implemented the Nigeria Foreign Exchange Market Conduct Code, which sets strict guidelines to promote fair trading practices and reduce speculative pressures on the naira.
These measures have collectively helped the naira appreciate from levels near N1,700 per US dollar in late November 2024 to around N1,531 today a remarkable gain that surprised many market watchers.
Kato Mukuru, CEO of Emerging and Frontier Capital, explained, “Nobody anticipated the naira would strengthen this rapidly. The central bank’s targeted policies have restored confidence, which is a crucial driver of the current market rally”.
The reforms have also attracted increased foreign investment, as improved FX market conditions reduce currency risk and enhance the appeal of Nigerian assets.
This inflow of foreign capital complements heightened domestic investor interest, partly driven by local tax reforms and successful capital-raising initiatives, such as Guaranty Trust Holding Company’s recent equity offering in London.
In addition to currency reforms, softer inflation readings have encouraged speculation that the CBN may reduce interest rates later this year.
Lower borrowing costs typically make equities more attractive compared to fixed income, further supporting demand for stocks.
Market activity has been particularly robust among smaller-cap companies. Packaging firm Beta Glass has surged more than 400% year-to-date, while Honeywell Flour Mill Plc and FTN Cocoa Processors have climbed over 300 per cent. Samson Esemuede, Chief Investment Officer at Lagos-based Zrosk Investment Management, attributes this rally to increased retail investor participation and macroeconomic stabilisation.
“A combination of factors—including macro-stabilisation, a large base of under-owned small and mid-cap stocks, and the prospect of falling equity costs—is creating a fertile environment for sustained gains”, Esemuede said.
Among the blue-chip stocks, MTN Nigeria has nearly doubled its share price so far this year, outperforming major peers such as BUA Foods, which rose 10.6%, Airtel Africa, with a 7.1% gain; and Dangote Cement, which has experienced a roughly 10% decline.
While the outlook remains positive, analysts caution that maintaining this momentum will require continued vigilance.
Challenges such as inflation rates hovering above 30% and vulnerability to oil price fluctuations persist, underscoring the need for sustained fiscal discipline and ongoing reforms.
Nevertheless, with the CBN’s proactive approach to stabilising the naira and enhancing market transparency, investor confidence has clearly rebounded.
Nigeria’s stock market is positioned for further growth, reflecting renewed faith in the country’s economic fundamentals and prospects.
Speaking during the last Monetary Policy Committee meeting held on May 25, Cardoso had said that the reforms so far implemented by the apex bank were beginning to yield tangible results.
He said, “I dare say that if those actions had not been taken when they were, the results would have been a lot more disastrous. It would not have been even more; they would have been disastrous for us.
He added, “On the issue of depreciation of the currency, which obviously everybody is always very interested in, you find out that the various currencies of the world were under attack and were having to defend themselves. You find that, relative to other countries, Nigeria came out very well indeed.
“We were able to ensure that our depreciation was very, very modest and that the stability was pretty much there. And that, in my view, was a reflection of a lot of the measures that we had taken prior to this time to stabilise our economy”.
He said it was the right decision for the apex bank to have started the reforms early, adding that “we stayed the course to the point where we built buffers which are able to withstand shocks that come in”.
