NGX Rebalancing Reveals Market Leadership Moves

Decision:
Investors need to consider repositioning their portfolios in response to Nigeria’s changing market leadership, as reflected in the NGX’s 2025 index rebalancing.

What Changed:
The Nigerian Exchange Limited completed its full-year 2025 index review, admitting stocks such as Guinness Nigeria, Presco, and Wema Bank into key indices, while removing United Capital, Access Holdings, International Breweries, and Stanbic IBTC from select benchmarks.

Who Benefits:
• Newly included stocks gaining visibility and passive inflows
• Companies with improved liquidity, free float, and market ranking
• Investors aligned with evolving sector and thematic trends

Who Pays:
• Stocks removed from flagship and partner indices
• Issuers facing reduced index-driven demand

What Is at Stake:
How index-linked capital flows reshape relative valuations and influence investor perception in Nigeria’s equity market.

What to Watch:
post-rebalancing price movements, liquidity changes, and passive fund adjustments.

Bottom Line:
Index membership is shifting, capital will follow.

MEMO 

The Nigerian Exchange Limited has released the outcome of its full-year 2025 market index review, reinforcing how changes in market capitalisation, liquidity, and sector dynamics are reshaping Nigeria’s equity landscape.

According to information published by the Exchange, the revised indices became effective at the start of trading on Friday, January 2, 2025. The review resulted in notable inclusions and exclusions across flagship, sectoral, thematic, and partner indices.

In the NGX 30 Index, which tracks the 30 most capitalised and liquid stocks on the Exchange, Guinness Nigeria Plc was admitted, replacing United Capital Plc. The change reflects Guinness Nigeria’s improved market standing during the year, supported by stronger liquidity and performance. Guinness Nigeria also emerged as the best-performing consumer goods stock in 2025.

United Capital’s exit from the NGX 30 does not necessarily signal deteriorating fundamentals but indicates a relative decline in ranking against the index’s eligibility criteria during the review period.

Sector-specific indices recorded limited changes, suggesting relative stability in sector leadership. In the NGX Insurance Index, Mutual Benefits Assurance replaced Guinea Insurance. In the NGX Oil and Gas Index, Japaul Gold and Ventures Plc took the place of MRS Oil Nigeria. No changes were recorded in the Banking, Consumer Goods, and Industrial Goods Indices.

More pronounced adjustments occurred across thematic and compliance-driven indices. The NGX Pension Index admitted Wema Bank Plc, while International Breweries Plc exited, reflecting shifts in free float, liquidity, and compliance with pension investment guidelines.

In the NGX Lotus Islamic Index, Presco Plc was added, reinforcing investor preference for Shariah-compliant, agriculture-linked, and export-oriented firms.

Partner and thematic indices saw broader reshuffling. The NGX Pension Broad Index added Nigeria Infrastructure Debt Fund, while Regency Alliance and Veritas Kapital exited. The Afrinvest Bank Value Index admitted Wema Bank and Jaiz Bank, removing Access Holdings Plc and Stanbic IBTC Holdings Plc.

The Afrinvest Dividend Yield Index welcomed Dangote Cement, Okomu Oil, Vitafoam, and Conoil, underscoring the market’s tilt toward dividend-paying stocks amid elevated interest rates. Meanwhile, the Meristem Growth Index added BUA Cement, Lafarge Africa, AXA Mansard, AIICO, CAP, Conoil, and United Capital, reflecting strong earnings momentum. The Meristem Value Index admitted ETI, Julius Berger, and NEM Insurance, while Dangote Sugar, TotalEnergies, and Lafarge Africa were removed.

NGX officials noted that index reviews are more than routine adjustments. According to Jude Chiemeka, the exercise supports the Exchange’s objective of deepening liquidity and boosting investor confidence through improved product design. Abimbola Babalola added that rebalancing ensures indices remain accurate tools for market tracking and portfolio alignment.

For investors, the implication is clear. Passive funds and institutional portfolios that track NGX indices are likely to rebalance holdings, driving inflows into newly added stocks and outflows from those removed. For active investors, the changes offer signals on shifting relevance and relative strength within Nigeria’s equity market.

DATA BOX (NGX 2025 INDEX REVIEW)

• Effective Date: January 2, 2025
  • NGX 30 Addition: Guinness Nigeria Plc
  • NGX 30 Removal: United Capital Plc
  • Pension Index Addition: Wema Bank Plc
  • Lotus Islamic Index Addition: Presco Plc
  • Best-Performing Consumer Goods Stock (2025): Guinness Nigeria Plc

POLICY SIGNALS

• Market leadership on the NGX is evolving.
  • Liquidity and compliance are increasingly decisive.
  • Index membership remains a powerful allocator of capital.

RISK RADAR

• Short-term volatility from forced portfolio rebalancing
  • Liquidity pressure on excluded stocks
  • Overreliance on index-driven demand