Investors in the Nigerian stock market lost N571 billion last week as investors continue to close their positions amid growing economic uncertainty and high borrowing cost.
Investors traded 1.511 billion shares worth N13.547 billion in 20,074 deals last week, against a total of 705.636 million shares valued at N12.850 billion that exchanged hands in 22,124 deals in the previous week.
Analysing activity across key sectors, the Financial Services Industry led the activity chart with 680.202 million shares valued at N4.672 billion traded in 9,230 deals. Therefore, contributing 45.02% and 34.48% to the total equity turnover volume and value, respectively.
The Services Industry followed with 499.178 million shares worth N3.407 billion in 866 deals. In third place was
the ICT Industry, with a turnover of 113.804 million shares worth N2.246 billion in 2,083 deals.
Capital Hotel Plc, FBN Holdings Plc and Jaiz Bank Plc were the three most traded equities. Together, the three accounted for 763.836 million shares worth N5.130 billion that were traded in 1,025 deals and contributed 50.55% and 37.87% to the total equity turnover volume and value, respectively.
The NGX All-Share Index depreciated by 1,058.26 index points or 2.09% to 49,664.07 index points from 50,722.33 index points it closed in the previous week.
Market capitalization depreciated by 2.09% or N571 billion to N26.787 trillion last week, down from N27.358 trillion it settled in the previous week.
Similarly, all other indices finished lower with the exception of The NGX Insurance, NGX Consumer Goods and NGX Growth Indices which appreciated by 6.00%, 3.00% and 1.56% while, The NGX ASeM index closed flat.
Thirty-three equities appreciated in price during the week, lower than forty-one equities in the previous week. Twenty- six equities depreciated in price higher than Twenty-two in the previous week, while ninety-seven equities remained unchanged higher than ninety-three equities recorded in the previous week.
The Exchange year-to-date return declined to 16.26%. See the details of top gainers and losers below.
Bearish Sentiment Persists: Investors Lose N112 Billion on NGX
Drastic Decline in FGN Bond Listings Raises Concerns Over Government Borrowing
Data from the Nigerian Exchange Limited (NGX) has shown that the value of listed Federal Government of Nigeria (FGN) Bonds on the exchange experienced a decline of 99.9% in the eight months ending on August 31, 2023.
Plummeting from N1.6 trillion recorded during the corresponding period in 2022 to a mere N148.2 billion.
The stark contrast in FGN Bond listings between the two years has raised eyebrows and prompted experts to delve into the implications of this significant shift.
Analysis of NGX data revealed that the bonds listed this year primarily consisted of the FGN Savings Bond and Sukuk, whereas the previous year featured a combination of both Federal Government Bonds and Savings Bonds.
Among the listings, the FGN Sukuk stood out with the highest recorded value of N130 billion for the period under review.
Analysts have identified several factors contributing to the stark decline in FGN Bond listings.
David Adonri, an analyst and Vice Executive Chairman at HighCap Securities Limited, commented on this development, and said, “The reduction of FGN Bond listing could be an indication that the government borrowed less in the domestic market, and its implication is that it could affect liquidity in the secondary market.”
He continued, “The decline could also be that the FGN Bonds were not listed on the Exchange during the period under review as only the Savings Bonds were captured as well as Sukuk.”
Adonri highlighted concerns about the country’s debt profile, both domestically and internationally, saying, “Both externally and internally, the immediate past government had taken more debt. This is increasing the risk of sovereign default and economic nightmares.” He also noted the adverse effects on the real sector, explaining that “the borrowing has now reached the alarming point of crowding out the productive real sector.”
Tajudeen Olayinka, an Investment Banker and Stockbroker, echoed similar sentiments, saying, “If there was an increase in debt listings in the market, it brings about increased liquidity and trading activities in the market, but the drop in the eight-month period could be largely as a result of higher yields in other competing instruments.”
Olayinka also speculated that “the drop in the FGN Bond listing could also be that there was less borrowing by the government in the primary market so not much to offer for listing in the secondary market.”
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