The Nigerian Exchange (NGX) continued its bullish run on Wednesday, June 4, as the overall market capitalization crossed the ₦71 trillion mark, despite persistent underperformance from the oil and gas sector.
The All-Share Index (ASI) rose by 0.32% or 354.25 points to close at 112,781.73, while the total market capitalization appreciated by ₦233 billion to close at ₦71.118 trillion. This upward trend was primarily fueled by gains in large and mid-cap stocks including Oando Plc, PZ Cussons Nigeria, GTCO, May & Baker Nigeria, and First Holdco.
Despite the gains in equities, the oil and gas sector — once a dominant force on the NGX — has emerged as the worst-performing index year-to-date (YTD), reflecting a sharp reversal in investor sentiment and a complex mix of market challenges.
Market breadth, which gauges investor sentiment, improved marginally as 32 stocks gained against 21 losers. Top gainers included Oando Plc, which appreciated by 10% to close at ₦51.70, and Royal Exchange, which gained 8.64% to close at 88 kobo. Other significant gainers were Legend Internet (+7.27%), Lasaco Assurance (+6.67%), and May & Baker Nigeria (+6.56%).
However, NCR Nigeria led the losers with a 9.89% drop, while ABC Transport, Meyer Plc, and Academy Press also posted steep declines. Livestock Feeds shed 6.77% to close at ₦8.95.
Market analysts at Vetiva Dealings and Brokerage said they expect upcoming sessions to be driven by dividend-related flows, noting that selective buying may support prices as several counters approach qualification dates. Afrivest analysts forecast a mild bearish performance due to profit-taking.
The oil and gas index has plunged by 13.38% YTD, a stark contrast to its stellar performance in 2024 when it led all NGX indices with a 24.07% gain as of May 31, 2024. The sector had delivered a cumulative return of 170% during the 2024 financial year, but now trails other key indices — the Consumer Goods Index (+37.4%), Banking Index (+5.97%), and ASeM Index (+0.6%).
Leading oil stocks such as Aradel, Conoil, MRS Oil, and Total Energies have all recorded sharp declines despite strong 2024 earnings reports. Aradel’s share price has fallen 11.4% YTD, from ₦598 to ₦530, and has lost 7% of its value since March 7. Similarly, Conoil dropped 10% YTD to close at ₦268.30 from ₦387.20, and MRS fell 34.9% to ₦141.80 from ₦217.80.
The decline in oil stocks, despite strong fundamentals, is driven by several interlinked factors:
Delayed financial disclosures and fears of weak dividend payouts.
Increased competition from new market players such as Dangote Refinery, leading to reduced fuel prices and squeezed margins.
Foreign exchange volatility, resulting in substantial FX losses across the board.
Broader global economic uncertainties causing investor caution and portfolio rebalancing.
The oil and gas sector’s financial health has been significantly impacted by the depreciation of the naira. For instance, Aradel Holdings posted a net FX loss of ₦19.6 billion in 2024, a 133% jump from the ₦8.39 billion loss recorded in 2023. The losses stemmed from foreign-denominated loans and liabilities that became costlier due to the exchange rate fluctuations.
These FX losses have eroded earnings in companies that otherwise reported strong operational performance, prompting sell-offs and raising concerns about future profitability.
Despite these setbacks, some industry stakeholders remain cautiously optimistic. Patrick Ajudua, President of the New Dimension Shareholders Association of Nigeria, stated that dividend declarations by major players like Seplat Energy have helped stabilize some oil stocks.
He added that with government intervention in pipeline security, improved pricing, and cost-optimization strategies, the sector may rebound before the end of 2025.
Nonetheless, investors remain wary, citing continued challenges such as OPEC production quotas, oil theft, and pipeline vandalism as risk factors. Until clearer policy signals and more stable macroeconomic conditions emerge, analysts expect mixed sentiment to prevail.
The NGX’s milestone crossing of the ₦71 trillion mark underscores the strength of Nigeria’s capital market and investor appetite for blue-chip stocks. However, the ongoing oil sector rout, despite stellar past performance, highlights the volatility and risk that remain embedded in the equities landscape.
In the short term, dividend-driven demand may cushion the market, but a sustained rally will depend on macroeconomic clarity, oil price stability, and investor confidence returning to the once-booming oil and gas sector.