The Nigerian Exchange (NGX) lost more than N111 billion on Thursday as alpha hunters continued to offload stock following the interest rate rise and the revelation of poor profits for the first half of 2023.
Bearish sentiment was high, fueled in part by selloffs in banking equities and dismal earnings reports from key corporations in the fast-moving consumer goods sector.
The recent 25 basis point interest rate rise by the Central Bank of Nigeria’s (CBN) monetary policy committee has begun to drive yield repricing in the fixed income market. According to market updates from investment specialists, this has increased the benchmark yield on Nigerian Treasury notes.
The average yield on Nigerian Treasury notes, for example, was pushed up by 281 basis points to 7%, according to Cordros Capital Limited via email, owing to selloffs despite the financial system’s strong liquidity.
Futureview Financial Services remarked in response to stock market performance that negative feelings took hold for the second time this week, producing a downward shift in the market index, as investors continue to respond to the new benchmark interest rate of 18.75% released on Tuesday.
The NGX All-Share Index (NGXASI) fell 0.31% to 65,482.91 points from 65,991.02 points in the previous session, according to data from the local market.
Futureview said Thursday’s market deterioration was primarily influenced by profit-taking activities in significant stocks, including JAPAULGOLD (-9.91%), FBNH (-4.39%), GTCO (-3.10%), PZ (-2.12%), FLOURMILL (-4.55%), and 33 other stocks.
Selloffs on NB share dragged market price downward by 4.76% while ZENITH BANK fell by 0.85%. Specific market development showed that investors decided to further shed their holdings in CADBURY (-9.80%) and UNILEVER (-1.59%) due to their disappointing H1 earnings.
Consequent to selloff bias, the year-to-date return settled at 27.77%. Meanwhile, sectoral performance was predominantly positive, with three out of the five sectors appreciating, according to stockbrokers.
The Insurance and Consumer Goods sectors closed negative, declining by 0.95% and 0.66%, respectively.
On the flip side, the Oil/Gas Sector closed positive, gained 0.88%, driven by price rise in TOTAL and OANDO. Followed by the Banking and Industrial sectors, which both gained 0.02% and 0.01%, respectively.
Meanwhile, market activity improved, with total deals and volume increasing by 9.87%, and 1.76%, respectively, amounting to 8,070 trades, and 509.25 million units. In terms of volume, JAPAULGOLD emerged as the most actively traded stock, with 115.70 million shares worth N129.72 billion changing hands in 471 deals.
Also, the gainers-to-losers ratio, which measures investor sentiment, decreased to 0.37x from 1.33x in the prior session as 14 stocks appreciated, 38 stocks depreciated while 64 stocks closed flat. Overall, equities market capitalisation advanced by N111.15 billion to N35.63 trillion.
