Nigerian stocks maintained their year-to-date bullish momentum after a short profit-taking correction in June.

Latest market activity showed the NGX’s All-Share Index resumed its consolidation near its recent all-time highs, cementing Nigeria as one of the world’s best-performing equities in the US dollar-adjusted index.

Latest price action showed the Nigerian major stock market traded around 242,145 points, a slight pullback from local highs of about 243,900.

Nigerian Exchange valuation settled at N156.2 trillion and is yielding investors a handsome return of plus 56 per cent year to date, thanks to an aggressive push by institutional investors into selected high-conviction counters.

Market participation has been broad, with short-term upward movement meeting some resistance around the 242,000 to 244,000 region.

Tier-1 banks dominate institutional inflows.

Tier-1 banks, FIRSTHOLDCO, UBA, GTCO and ZENITH, are hogging most of the institutional liquidity as they meet the statutory expansion of their capital base.

Low-priced small-cap momentum plays such as MCNICHO, VERITASKAP and CWG are showing the most spectacular price rallies as analysts advise caution against differentiating turnaround stocks from momentum ones.

FIRSTHOLDCO stock price is going through one of the most forceful rallies witnessed among Nigerian top banks due to the execution of their recapitalisation exercise, heavy institutional demand, and improved earnings.

The commercial banking group has not just satisfied, but exceeded the Central Bank of Nigeria (CBN)’s compulsory N500 billion minimum capital required to obtain an international commercial banking licence for the banking group through multi-stages, including private placements of funds into FBN Holdings Plc.

This process saw it successfully undertake Rights Issues and privately issued capital, excluding a N45 billion transaction from a private investor, including divesting or disposing of some non-essential business, such as FBNQuest Merchant Bank.

Femi Otedola, FIRSTHOLDCO chairman, has also outlined a capital base target of N1 trillion for its lending power across Africa.

Trading activity in United Bank for Africa Plc (UBA) remains strong on the Nigeria Stock Exchange, currently recovering off support as institutional investors position around Tier 1 banks recapitalisation and pan-African earnings stability.

The latest share price of UBA is currently 44.25, up 7.93 per cent in recent momentum.

The range of share price within a year is 34.25 to 55.20.

The bank is financially stable, as evidenced by very strong retained earnings and shareholders’ fund of more than N2 trillion, and may not face a challenge raising further capital.

In addition, tier-1 dividend yield plays, as earnings of banks like UBA, GTCO, FirstHoldCo and Zenith Bank remain on solid footing, may see investors go long to secure interim payout yield.

The earnings momentum at the Tier 1 banks should sustain, even in the face of elevated operational costs, given the sharp rise in lending yields that support strong top-line revenues.

Furthermore, the recent stabilisation of the naira at about N1,380 to N1,385 per dollar, together with growth in foreign exchange reserves moving towards 52 billion dollars, restored foreign portfolio investors’ confidence.

However, high yields on money markets of 18 to 20 per cent may compete directly with equities as investment instruments, given that the Monetary Policy Rate is at 26.50 per cent despite equities serving as an excellent proxy against structural inflation.

Investors are taking cash down the value chain to find undervalued mid-caps following strong momentum in blue-chip heavies.

On the back of the multi-month rallies, many large-cap industrial and banking counters have reached fair value, driving interest of institutional and individual investors towards bargain opportunities at the mid-capitalised level with low price-to-earnings ratios.

Market participants are seeing many transportation, agribusiness, and niche mortgage servicers, such as ABC Transport, FTN Cocoa and Abbey Mortgage, experience significant year-to-date rallies of 50 to 90 per cent and above, amid a combination of enhanced operational outlooks, turning around earnings perceptions, and the low price-to-earnings basis currently used to select these firms.