The Nigerian Exchange Limited (NGX) has completed its full-year 2025 market index review, leading to the exclusion of United Capital, Access Holdings, and Stanbic IBTC from some of its major indices. The rebalancing, announced on January 4, 2026, reflects shifts in the market capitalization and liquidity of listed companies throughout the year.

What you should know

NGX indices are benchmarks used by investors and fund managers to track the performance of the Nigerian stock market. They are periodically reviewed to ensure they accurately reflect the current market conditions and the composition of listed companies. The review process considers factors such as market capitalization, liquidity, and free float.

The removal of United Capital, Access Holdings, and Stanbic IBTC suggests a change in their relative market standing compared to other listed companies. While the NGX announcement doesn't specify which particular indices these companies were removed from, such changes typically impact index-tracking funds and investor portfolios.

Recall that the NGX conducts index reviews bi-annually (half-year and full-year) to maintain the integrity and representativeness of its indices. This ensures that the indices remain relevant and accurately reflect the performance of the underlying securities.

Impact on Companies

The removal from key indices could have several implications for the affected companies. It might lead to a decrease in demand for their shares, as index-tracking funds are forced to sell their holdings to align with the updated index composition.

However, the impact is not always negative. Companies that are added to indices often experience an increase in demand, as funds seek to include them in their portfolios. The removed companies may now focus on improving their market performance to regain inclusion in future index reviews.

Market Implications

The index rebalancing highlights the dynamic nature of the Nigerian stock market and the importance of continuous monitoring. Investors need to be aware of these changes and how they might affect their portfolios.

Market watchers believe that the rebalancing could also trigger a reshuffling of investor portfolios as fund managers adjust their holdings to reflect the new index compositions. This could lead to increased trading activity in the short term.

Investors should closely monitor the trading activity of the affected companies and the overall market response to the index rebalancing. This development underscores the significance of conducting thorough due diligence and diversifying investment portfolios.

This comes as the NGX continues its efforts to enhance market transparency and efficiency, providing investors with reliable benchmarks for tracking market performance.