The market capitalization of the Nigerian Exchange (NGX) decreased by roughly N108 billion each week as a result of massive selloffs during widespread demonstrations.
Business operations were disrupted last week by protests by Nigerians from all walks of life due to weak macroeconomic conditions and rising poverty. The stock market also had its fair share of problems, as investors profited from unpredictabilities in addition to the lackluster corporate results reports so far.
“… position taking and sell-offs despite the ongoing half-year earnings reporting season following the influx of corporate numbers coming in impressive, mixed, and disappointing folds for equity investors,” Cowry Asset Limited summarized the trading pattern in an email note.
Even as the benchmark index fell despite negative internals, lower traded volumes, and cheap valuations, stockbrokers claimed the negative close reflected the impact of government policies and the weakening economy.
According to the data, market capitalization decreased as the all-share index fell by 0.46% week over week to 97,745.73 points. Amidst dismal market fundamentals, equity investors were observed to persist in their sectoral realignment as we entered the new trading month of August, following a negative closing of 2.28% in July.
Cowry Asset Limited stated that this movement was supported by a decline in investor sentiment across all sectors, which resulted in a N107.7 billion loss in four of this week’s five sessions, despite the fact that the index’s year-to-date return was 30.7%.
Across the sectoral front, it was a mixed outing, as three out of the five sectors ended on a negative note. The consumer goods index led the laggards this week by 3.33% week-on-week due to losses sustained by Nestle Nigeria, among others.
The banking and industrial indexes also retreated by 0.48% and 0.01% week-on-week due to price declines in MECURE, NASCON, BERGER, UBA, and FBNH.
In contrast, the oil and gas and insurance indexes performed positively, gaining 4.27% and 1.59% week-on-week, driven by price increases and buy interest in OANDO, ETERNA, MANSARD, and CONERSTONE, respectively.
In addition to the downbeat market performance, market participation levels waned, mirroring the trend seen in the previous week, stockbrokers said. Total traded volume declined by 4.63% to 3.39 billion units. However, the number of trades soared by 4.53% week-on-week to 44,814 deals, and the total value traded rose by 10.77% week-on-week to N52.30 billion.
Stock market analysts at Cowry Asset Limited said this comes on the back of mixed sentiments triggered by expectations for a further pullback in the market. At the close of the week, the top-performing stocks included RTBRISCOE (+25%), OANDO (+24%), IMG (+21%), CUSTODIAN (+20%), and MAYBAKER (+19%).
On the flip side, stocks such as UNITED CAPITAL (-69%), MECURE (-19%), THOMASWY (-29%), CHELLARAM (-18%), and NASCON (-13%) faced declines in their share prices, respectively.
Stockbrokers foresee a mixed trend with a possibility of profit-taking in the new week amidst protests. Investors are likely to engage in sectoral rotation, capitalizing on stocks that experience pullbacks to position themselves strategically, Cowry Asset Limited said in an email to investors.
The firm posited that this rotation strategy is expected to create buying opportunities, especially in anticipation of upcoming releases and dividend announcements from major banking institutions in the corporate reporting season.
