Weeks after crossing the N30 trillion threshold, the market capitalization of the Nigerian Exchange Limited fell below it last week, costing investors N476 billion.
Investors lost N3 billion on Monday, as the market closed at N 30.391 trillion, beginning this bearish pattern. Tuesday’s market value decreased by N36 billion, ending the day at N30.355 trillion. Investors lost N127 billion on Wednesday, and the market cap ended at N30.228 trillion, maintaining the pattern.
At Thursday’s market end, capitalization had taken the biggest hit of the week, falling to N29.915 trillion, while investors had lost N313 billion. The market value remained at N29.915 trillion on Friday.
The All Share Index, which had opened the week at 55, 788.37, finished Friday trading at 54, 915.39 after losing 872.78 basis points. Additionally, the year-to-date results decreased from 8.15 percent on March 8 to 6.43 percent on Friday.
All other indices also ended lower, with the exception of the NGX Consumer Goods and NXG Growth indices, which saw gains of 1.11 percent and 2.90 percent, respectively. The NGX ASeM, NGX Oil and Gas, and NGX Sovereign Bond indices all ended level.
Investors traded a total of 853.745 million shares worth N11.841 billion in 18,543 deals this week on the Exchange’s trading platform, down from a total of 1.023 billion shares worth N20.221 billion that exchanged hands last week in 18,650 deals.
The financial services industry (measured by volume) led the activity chart with 547.566 million shares valued at N7.100 billion traded in 9,419 deals; thus contributing 64.14 per cent and 59.97 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 85.145 million shares worth N134.73m in 717 deals. The third place was the consumer goods industry, with a turnover of 52.981m shares worth N1.584 billion in 2,865 deals.
Reacting to the development, capital market stakeholders blame profit-taking as a major driver of the dip. Professor of Capital Market, Uche Uwaleke of the Nasarawa State University, Keffi, pointed out that profit-taking was a factor in the equities market trend as well as earning season being over.
He said, “It’s mostly profit taking and the earnings season is over.”
This stance was reiterated by economic and capital market analyst, Rotimi Fakayejo, who said that investors have been taking advantage of the bonus shares that they got recently from the likes of MTN Nigeria.
Fakayejo said, “The market came down by virtue of MTN shedding N240bn from its market cap. If you discount the loss in MTN, the market will remain strong above N30tn.”
He added that the telecom company, MTN Nigeria lost market cap due to “Profit taking from the public offer bonus credited to shareholders recently.”
Meanwhile, the Managing Director/Chief Business Officer of Optimus by Afrinvest, Ayodeji Ebo, stated the market was merely correcting itself as well as reacting to the expected drop in economic activities for the first quarter of 2023.
He said, “The Nigerian stock market rose significantly in the last two months and it’s taking a bit of correction. Additionally, the expected slowdown in Q1:2023 economic activity due to the cash crunch may also be affecting market sentiment.”
