Foreign Investors Hunt Nigerian Top Banks with Attractive Valuations
With improved confidence in Nigeria’s foreign exchange market, offshore investors have begun to return to the equities market, and bank stocks were their first targets, MarketForces Africa gathered from investment bankers and several investors notes.
Hunting after attractive earnings expectations, foreign investors increased bets on Nigerian banks in January. Top banks were the major targets, with some interest seen in consumer goods names.
The surge in interest lifted top banks’ valuations higher, with GTCO market valuations crossing N1.8 trillion, Zenith Bank surpassed N1,6 trillion, and Access Holdings was above N1 trillion level. Year-to-date, the equities market return settled at 1.5% as investors’ sentiment pushed the Nigerian Exchange all-share index higher week on week amidst the earnings festival.
In January, the performance of the local bourse was guided by portfolio positioning during early trading session in 2025. Market sentiment were generally mixed ahead of corporate actions and earnings
ZENITH announced the completion of its capital raise of ₦350.4 billion, which was oversubscribed by 160.4%. Also, GTCO Plc announced the completion of the first tranche of its equity capital raise programme (₦209.4bn). Afrinvest Limited said this reinforced its capacity to meet regulatory requirements and pursue growth initiatives such as footprint expansion, product enhancement, and innovation.
Key events included listings of GTCO and FCMB shares, delisting of TOURIST and UHOMES, and off-market trades in BUAFOODS and JAPAULGOLD. Eventually, NGX-ASI rose 1.5% month on month to settle at 104,496.12 points, according to Afrinvest Limited investor’s note.
In its investors note, AIICO Capital Limited said earnings releases influenced sentiments, saying offshore interest was seen in GTCO, ZENITHBANK, and NESTLE
Consequently, year-to-date return closed at 1.5% while market capitalisation rose 3.0% to ₦64.7 trillion. The investment firm stated that monthly trading activity level varied as average volume traded rose 15.0% to 1.2 billion units while value traded dipped 19.0% to ₦15.4 billion.
The top traded stocks by volume were NSLTECH (904.9m units), UNIVINSURE (706.4m units) and ACCESSCORP (692.4m units), while ARADEL (₦26.4bn), GTCO (₦23.2bn) and ACCESSCORP (₦17.3bn) led by value.
Performance across sectors within Afrinvest Limited coverage was mixed, as 3 indices gained while the other three lost. The Banking index led the gainers, up 9.8% m/m due to price upticks in ZENITH (+11.2%) and FIDELITY (+11.1%).
Following, the AFR-ICT and consumer goods indices advanced 8.6% and 4.5%, respectively, as MTNN (+25.0%), OMATEK (+11.0%), and HONEYFLOUR (+52.1%) recorded gains.
Conversely, the Industrial Goods index fell 8.5% m/m on the back of selloffs in DANGCEM (-17.7%). Similarly, the Insurance and Oil & Gas indices fell 1.1% and 1.6% respectively, owing to profit-taking in SUNUASSURE (- 46.5%), EUNISELL (-30.0%) and ARADEL (-4.8%).
Investor sentiment as measured by market breadth declined to 1.2x (previously: 1.7x) as 80 stocks gained, 30 declined, and 41 remained unchanged. SCOA (+97.6%), CHELLARAM (+76.5%) and HONYFLOU (+52.1%) were the top performers, while SUNUASSU (-46.5%), EUNISELL (-30.0%) and MRSOIL (-25.2%) were the top underperforming stocks for the month.
In February, analysts anticipate a positive market outing as investors hunt for bargains and position in stocks with sound fundamentals ahead of earnings releases.
Local and Foreign Investors in Equities Market
According to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX), total transactions in the local bourse rose to a seventeen-month high, increasing by 52.3% to N673.66 billion in December from N442.34 billion in November.
The performance was primarily driven by the higher participation from both domestic investors and foreign investors. Local investors actually accounted for 90.1% of gross transactions on NGX, while foreign investors took care of 9.9%. On a year-on-year basis, total transactions increased by 56.1% to N5.59 trillion from N3.58 trillion, Cordros Capital Limited said in a review note.
In the period, domestic investors’ inflows surged by 51.2% to N606.91 billion from N401.40 billion in November due to increases in collections from institutional and retail investors.
On the other hand, inflows from foreign investors rose after a month of contraction, rising by 63.0% month on month to N66.75 billion in December from N40.94 billion, partly due to the improved market confidence following a more efficient FX market.
“While we expect domestic investors to continue to contribute the most to total transaction value, we think buying activities will be constrained by elevated yields in the fixed-income market. Also, we expect the stability of the naira to support increased foreign investors’ participation in the equities market”, analysts at Cordros Capital Limited said.
Some analysts, however, noted that that has been the pattern, especially with multifaceted macro pressure in the consumers’ goods sector, which has forced some companies to exit or reduce while others planned to leave the tough economic environment. #Foreign Investors Hunt Nigerian Top Banks with Attractive Valuations Senate Promises Adequate Funding for Fiscal Responsibility Commission
