Stockbrokers and investors have abandoned the equity market due to the Naira volatility, lack of market drive towards the end of the year,  and the high interest rate in Nigeria.

A long-time investor, David Adonri explained that the volume of trade usually drops towards the end of the year but the market normalises in January.

With the persistent drop in the value of the Nigerian Naira against foreign currencies, investors are wary of unfavourable currency conversion.

“The equity market reacts to so many things. The depreciation of the naira, which is around N1,700, of course, would impact the market. The foreign exchange position can make people exit the market and convert to hard currency, which is stronger, possibly to come back to the market when they see an improved currency level. That is what we call carry-over trade,” Adonri said.

“We also have the hike in the interest rate, which also causes financial assets to migrate away from the capital market,” Adonri added.

“Third, we are in the period of the year, where seasonally, the market is a little bit down because there is nothing specific to drive the market like full-year results or half-year dividends and so on. So we slide to a low tempo from September up to November until after Christmas the market starts trending up again,” he further stated.

According to a report by the Nigerian Exchange Group (NGX), equity investment transactions dropped in Q3, 2024 compared to the previous quarter of the year.

In the same vein, the National Bureau of Statistics (NBS) reported that capital importation showed that investors shifted from equity investment to portfolio investment.

The portfolio investment includes equity, bonds, and money market instruments.

With the recent shift, the portfolio investment made a 10.37 percent increase amounting to a $106.85 million gain from the N1.03 billion total capital inflow.

The Association of Securities Dealing Houses of Nigeria (ASHON) has sought an upward review of stockbroking fees from the current ceiling of 1.35%.

Its Chairman, Mr Sam Onukwue, disclosed this in a statement presenting the outcome of the association’s Annual General Meeting (AGM) on Wednesday in Lagos.

Mr Onukwue said the review was necessary as the fee had been static for years, while the high cost of doing business was affecting the earnings of its members.

He noted that stockbroking fees had remained at a ceiling of 1.35 percent in spite of the increasing inflation rate and other annual regulatory charges paid by ASHON members.

According to him, the suspension of margin trading due to abuse has crippled access to liquidity for many stockbroking firms.

He said this had also made it difficult for stockbrokers to leverage emerging opportunities in the market.

Mr Onukwe revealed that ASHON was working closely with the capital market regulators to address the issue and the need to re-introduce margin trading for mutual benefits of stockbroking firms and the stock market.

“ASHON, after rigorous market research, has written a formal request to SEC for an upward review of the stockbroking fees.

“The Association has made representations to the regulatory authorities for the reintroduction of margin trading.

“The issues at stake are the exclusion of banking stocks in the securities to be traded, as well as the need to update the rules, which was at the behest of the CBN,” he said.

According to the chairman, the association has engaged the Board since the NGX announced its capital raise by way of rights on the status of the two per cent Claims Reserve Shares provided for in the scheme of arrangement of the demutualisation.

Mr Onukwue also explained that the Exchange has committed to a transparent resolution of the issues before the rights offer opens, adding that the association would update its members accordingly.

He mentioned that ASHON, in conjunction with the NGX X-Academy, successfully organised a seminar on “Market Liquidity: Insights, Challenges and Solutions.”

The chairman said that based on the success of the seminar; the association intended to continue to collaborate with key market infrastructure in creating opportunities for its members to upskill their workforce.

“We have strengthened our relationship with the Institute of Capital Market Registrar (ICMR), to create a seamless interface between our members and Registrars.

“We believe this has fostered closer understanding between our members and helped to resolve operational issues between them.

“The association has continued to make progress against all odds. We are determined to survive, and our faith will see us through,” he added.

The Nigerian Exchange Limited (NGX) lost 0.25 percent on Wednesday following three consecutive days of gains that saw NGX market capitalization approach N60 trillion.

Activity on the Exchange declined as investors exchanged 257.552 million shares worth N8.993 billion in 7,776 transactions, compared to 286.1 million shares worth N26.8 billion traded in 9,650 deals on Tuesday.

The market capitalization of listed equities decreased by N148 billion from N59.707 trillion in the previous session to N59.559 trillion on Wednesday.

The NGX All-Share Index dropped 0.25 percent, or 249.4 points to close at 98,291.53 index points from 98,540.93 index points on Tuesday.

Deap Capital Management led the gainers with a 10 percent increase while UACN and Dangote Sugar followed with 9.90 percent and 9.69 percent gains, respectively.

On the flip side, Custodian led the losers with an 8.98 percent decline to close at N11.65 per share. Okomu Oil lost N24.90, or 6.86 percent to settle at N338.10 per unit and Consolidated Hallmark Holdings fell 6.62 percent, or 10 kobo to N1.41 per share.

Fidelity Bank was the most traded stock with 38.209 million shares worth N559.084 million exchanged. See other details below.

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