Nigerian Stock Market Shed N283 Billion in August 2022

At the end of August 2022, Nigeria Exchange Limited (NGX) closed lower despite earnings and dividends announcement from listed companies. 

This loss follows the uncertainty in the global economy, the prevailing economic challenges facing the country, the deteriorated insecurity and the citizens’ low purchasing power. 

Similarly, the uncertainty surrounding the general election in 2023 is taking a toll on the equity market. The fact that a large number of investors are shying away from the equity market because of the uncertainty that could accompany the election contributed to the negative performance of the stock market in August. 

Investors lost a total of N283 Billion which represents 1.07 percent of the market value in August. 

The overall market capitalisation of all the listed companies closed on August 31st, 2022 at N26.880 trillion as against N27.163 trillion when it opened on the 1st of August, 2022. 

The equity market faced several turbulences which include an inflation rate of 19.64 percent in July 2022 and the scarcity of foreign exchange which led to apathy from foreign investors. All these fundamental factors impacted negatively on the NGX. 

A closer analysis shows that the NGX Industrial Index suffered the highest decline in August, dropping by 13.8 percent while the Oil and gas Index depreciated by 4.3 per cent.

On the contrary, the NGX banking index added 2.4 per cent in August while the NGX Insurance Index increased by 7.9 percent. 

Reacting to this mixed development, an analyst at PAC Holdings, Wole Adeyeye, said some investors migrated from the stock market to fixed-income market in a move to take advantage of high yields, which was triggered by the recent hike in policy rate. 

He stated further that “ foreign investors avoided the Nigerian stock market due to the upcoming general elections, weak local currency and insecurity in the country.” 

While this trend may likely continue for a couple of months because of the attractiveness of the fixed income market which is expected to remain relatively high and the uncertainty surrounding the economy which has created a degree of fear for investors, the long-term outlook of the equity market looks positive. 

Besides, the equity market still maintains a positive performance in its Year-To-Date (YTD) scorecard as the market is up by 17.17%.