Banking Stocks Lead NGX Weekly Rally as Investors Increase Exposure to Lenders

Banking stocks once again dictated the direction of the Nigerian Exchange (NGX) last week with sustained buying in major lenders offsetting widespread weakness across the broader market and reinforcing the sector’s dominance in trading activity.

Although the market operated for only four trading sessions following the Federal Government’s declaration of Tuesday, August 25, as a public holiday to mark Eid el Maulud, the banking sector remained the dominant force behind market performance.

The NGX Banking Index advanced 2.89 percent, substantially outperforming the NGX All-Share Index (ASI), which gained 0.81 percent to close the week at 241,298.47 points.

Equity market capitalisation also appreciated by 0.84 percent to N155.826 trillion, adding value to listed equities despite mixed performance across the broader market.

However, the headline gain tells only part of the story.

A closer examination of trading activity shows that the market’s recovery was driven by a relatively small group of banking and financial stocks rather than widespread buying across the Exchange.

The clearest evidence lies in sector turnover.

The Financial Services Industry accounted for 1.977 billion shares valued at N71.563 billion, representing 78.87 percent of the total shares traded during the week and 58.08 percent of total transaction value.

In practical terms, nearly four out of every five shares traded on the Nigerian Exchange last week came from financial services companies.

That level of concentration highlights the extent to which investors focused on banking and other financial stocks while remaining cautious about other sectors of the market.

The same pattern was evident in individual stock performance.

First HoldCo Plc ranked among the week’s strongest performers after gaining 11.58 percent, rising from N129.95 to N145.00, making it the second-best performing stock of the week.

Access Holdings Plc also featured among the top gainers after appreciating 9.26 percent to close at N29.50.

The strong performance of both banking stocks reinforces the sector’s leadership during the week and suggests investors continued to increase exposure to companies viewed as liquid, fundamentally strong and capable of attracting institutional participation.

Trading activity further confirms this trend.

The three most actively traded equities by volume—Fortis Global Insurance Plc, Jaiz Bank Plc and First HoldCo Plc—recorded a combined turnover of 793.104 million shares worth N26.898 billion in 14,758 deals.

Together, they accounted for 31.64 percent of total market volume and 21.83 percent of total market value, illustrating how liquidity became concentrated in a handful of actively traded financial stocks.

Another important feature of the week’s performance was the divergence between the benchmark index and overall market breadth.

Although the All-Share Index closed higher, only 24 equities appreciated during the week, while 55 equities declined and 68 closed unchanged.

This means more than twice as many stocks lost value as gained.

The implication is significant.

The market did not rise because buying spread across the Exchange. Instead, gains in heavyweight stocks—particularly within the banking sector—were sufficient to offset declines recorded across a larger number of listed companies.

Trading statistics also reveal a shift in investor behaviour.

Total turnover declined sharply from 6.242 billion shares in the previous week to 2.507 billion shares, while the value of transactions eased from N157.764 billion to N123.223 billion.

The substantial decline in trading volume compared with the relatively smaller decline in transaction value suggests investors traded fewer shares but continued to commit sizeable capital to higher-value stocks, particularly within the financial services sector.

Sector performance supports this conclusion.

While the NGX Oil & Gas Index delivered the strongest weekly return with a 4.54 percent gain, the NGX Banking Index remained one of the market’s leading performers.

By contrast, the NGX Insurance Index declined 0.63 percent, the NGX Consumer Goods Index fell 0.67 percent, the NGX MERI Growth Index lost 2.21 percent, and the NGX Growth Index dropped 1.56 percent, indicating that investor confidence remained selective rather than broad-based.

The week’s trading demonstrates that banking stocks continue to set the pace for the Nigerian equity market.

As institutional and retail investors concentrated liquidity in financial services, the sector not only generated the largest share of trading activity but also provided much of the momentum behind the market’s weekly advance.

The performance of First HoldCo, Access Holdings and the broader Banking Index suggests that financial stocks remain the preferred destination for investors seeking liquidity and market leadership.