The Nigerian Exchange Limited (NGX) experienced a significant downturn in its stock market, witnessing a staggering decline of N539 billion Week-on-Week (WoW).
This drop has been attributed to the cautious approach taken by both local and foreign investors, who are navigating through the complexities of current macroeconomic uncertainties.
With many seeking to rebalance their portfolios in light of both global and domestic economic challenges, investor sentiment remains shaky.
The primary cause of this decrease in market capitalization can be traced back to profit-taking in large-cap stocks, which has further diminished investor confidence.
This shift reflects a renewed bearish sentiment within the market, where sell-offs across key sectors such as banking and industrial goods have adversely affected overall market performance.
As the trading week commenced, the overall market capitalization opened at N56.578 trillion. However, by the end of the week, it had plummeted by N539 billion, ultimately closing at N56.039 trillion.
In conjunction with this decline in market capitalization, the benchmark index—the Nigerian Exchange Limited All-Share Index (NGX ASI)—also fell by 0.95 percent Week-on-Week, ending the week at 97,520.54 basis points, a decrease from 98,458.68 basis points at which it began trading.
When examining the performance across various sectors, results were mixed. The NGX Oil & Gas and NGX Insurance indices emerged as leaders in terms of gains, reporting weekly increases of 7.29 percent and 3.81 percent, respectively.
Additionally, the NGX Consumer Goods index managed a modest gain of 0.34 percent. However, this positive performance was contrasted by losses in other sectors, with the NGX Industrial Goods and NGX Banking indices closing the week down by 6.84 per cent and 0.74 percent, respectively.
Despite the overall downturn, the market breadth was somewhat positive, as 45 equities recorded price appreciation while 33 equities saw a decline in their prices, and 73 equities remained stable without any change.
Among the gainers, Deap Capital Management & Trust topped the list with an impressive increase of 31.53 percent, closing at N1.46 per share.
Seplat Energy followed closely with a gain of 21.00 percent, closing at N4,964.70, while Tripple Gee and Company saw a rise of 20.34 percent, closing at N4.97 per share.
Conversely, McNichols led the decliners, experiencing a 15.63 percent drop to close at N1.35 per share. Fidelity Bank also faced challenges, with a 13.33 per cent loss, bringing its share price down to N13.00. Similarly, Dangote Sugar Refinery saw a decline of 12.20 percent, closing at N30.60 per share.
Overall, investors engaged in a total turnover of 2.872 billion shares worth N132.811 billion over 39,867 transactions during the past week. This is a notable decrease compared to the previous week, where 3.318 billion shares valued at N45.911 billion were exchanged across 49,243 transactions.
The Consumer Goods Industry led in trading volume, accounting for 1.341 billion shares valued at N106.099 billion across 4,652 transactions. This sector contributed an impressive 46.68 percent to total equity turnover volume and 79.89 percent to total value.
The Financial Services Industry followed, with 926.615 million shares worth N14.924 billion traded in 19,174 transactions, while the Oil and Gas Industry recorded a turnover of 244.638 million shares worth N7.221 billion over 4,221 transactions.
In terms of leading equities, trading activity from top players such as Guinness Nigeria, United Bank for Africa (UBA), and Japaul Gold & Ventures accounted for a significant portion of the activity, totaling 1.708 billion shares valued at N110.766 billion over 5,004 transactions. This impressive volume contributed to 59.47 percent of the total equity turnover volume and 83.40 percent of its total value.
Looking ahead, stock market analysts are cautiously optimistic, expecting positive sentiments to return to the market in the upcoming week.
Analysts at Cowry Assets Management Limited stated, “We anticipate a positive outing for the local bourse as we see the local bourse showing signs of recovery heading into the final quarter of the year, while the market awaits the nine months performance scorecards of some of the early filers such as Geregu Power, Dangote Cement, Dangote Sugar Refinery, MTN Nigeria Communications (MTNN), amongst others. Nevertheless, we continue to advise investors to focus on fundamentally sound stocks.”
Mr. Ambrose Omordion, the Chief Operating Officer of InvestData Consulting Limited, also shared insights, stating, “We expect mixed sentiment to continue on profit-taking and portfolio rebalancing ahead of Q3 earnings reporting session. Also, sector rotation continues in the market, with investors taking advantage of pullbacks to buy into value.
“This is amid the volatility and pullbacks that add more strength to upside potential. Consequently, investors should take advantage of price correction while considering the trends and events across the globe and domestically.”
In addition, analysts at Afrinvest Limited noted, “In October, despite pressure from upward repricing of fixed-income yields, we expect a bullish performance in the domestic equities market in October. Specifically, we anticipate long positioning for Q3 earnings and the announcement of banking interim dividends to be major catalysts.”
