Although Nigeria’s capital market is one of the most traded capital markets in Africa, it has however witnessed increased volatility and inadequate liquidity which has triggered a persistent downturn in the stock market.
This challenge of inadequate liquidity has impacted negatively on market performance and explained why some prospect-loaded companies like Flutterwave partly shun the Nigeria Exchange Limited.
Since the global financial crisis of 2008, there has been an underperformance of some listed stocks on the Nigeria Exchange Limited (NGX). Much of the problem has been attributed to illiquidity and low investors’ confidence.
The development has continued to fuel persistent fall in share prices of listed firms, with several blue-chip stocks recording a 10-year low.
A seven-year review of the banking stocks shows that the shares of Unity Bank Plc, which stood at N2.29 kobo as of 2015, dropped to 43 kobo as at the close of a transaction on Friday, shedding more than 80 per cent in value.
Similarly, Union Bank Plc also shed 35.5 per cent in the same period to close at N5.60 kobo.
In the consumer goods subsector, PZ Cussons Plc lost 60.72 per cent during the period, dropping from N29.18 kobo to N8.20 kobo while Honeywell depreciated to N2.53 kobo from N3.72 kobo.
Nonetheless, it should be noted that some companies have performed amazingly well on the NGX in the last seven years. For example, the FUGAZ ( First bank, GTB, UBA, Access, and Zenith Bank,) have all witnessed increased growth. For instance, Zenith Bank shares price which was trading at N14.76 in December 2017 is now trading at N21.50.
Regardless, experts have suggested that the regulators should restrategise and reposition the capital market to leverage the remittance windfall to boost the economy.
Nigeria topped sub-Saharan Africa (SSA) in remittances with $20 billion in 2021. This performance was a remarkable improvement from the $17.21 billion recorded in 2020. If investment-friendly mechanisms and safety policies are put in place on the Nigeria Exchange Limited, it could attract diaspora remittance.
According to Paul Uzom, Head of Equity Trading at Planet Capital, “if dollar-denominated equities or fixed income is introduced in the market, it would attract the diaspora funds into the capital market. Most diaspora investors are only interested in Eurobonds because of a lack of confidence in the local currency”.
Naira has been on a consistent fall in the last few years. In 2015, the Nigerian Naira was trading at an average of N197 to $1. It is, however, trading at an average of N425 today.
Nigeria’s Equities Market Rebounds, Gains N165 Billion Amid Investor Optimism
Nigeria’s equities market rebounded on Wednesday as gained N165 billion in value amid renewed optimism and strategic re-entry into undervalued stocks.
The recent downturn which plagued the market earlier in the week saw investors holding back amidst uncertainties surrounding fixed-income securities’ interest rates.
However, Wednesday’s rebound reflected a shift in sentiment as investors identified opportunities for lucrative returns in value stocks.
Key players such as BUA Cement and FBN Holdings spearheaded the market’s upward trajectory with notable gains observed across various sectors.
BUA Cement surged by 4.93% from N142.95 to N150 per share while FBN Holdings gained by 9.96% from N26.10 to N28.70 per share.
Despite these gains, Okomu Oil Palm experienced a decline with its share price dropping from N270 to N243, representing a 10% decrease.
The market’s positive performance defied earlier projections of a prolonged bearish trend. Analysts had anticipated a continuation of the subdued market activity due to prevailing uncertainties in the fixed-income segment.
Wednesday’s trading session saw increased activity, with investors exchanging 302,739,517 shares valued at N6.552 billion across 8,611 deals.
Active trading was observed in stocks such as FBN Holdings, Japaul Gold, Transcorp, Veritas, and GTCO.
The surge in the equities market reflects investors’ resilience and their confidence in the long-term prospects of Nigeria’s economy.
It also underscores the dynamic nature of the market, where strategic investments and timely interventions can yield substantial gains even in challenging times.
Honeywell Flour Mills, BUA Cement Lead Losers as Nigerian Market Dips N730bn
The Nigerian equity market continued its downward spiral as Honeywell Flour Mills and BUA Cement emerged as the top losers.
The All-Share Index (ASI) declined by 1.30 percent to settle at 101,060.67 points while the market capitalization plummeted to N55.298 trillion, representing a decline of N730 billion in just two consecutive trading days.
The bearish trend which commenced on Monday persisted as investors grappled with mounting concerns over economic uncertainties and global market dynamics.
Honeywell Flour Mills led losers with a 10 percent decline to close at N3.60 per share. Followed closely by BUA Cement’s 9.98 percent of its share value to settle at N142.95.
PZ Cussons also experienced a notable dip, posting a 9.75 percent loss to close at N27.30 per share.
The persisting sell-offs predominantly affected medium to penny stocks, with only eight equities managing to record gains amidst 43 losses.
Market analysts attributed the performance to a combination of factors, including ongoing global economic uncertainties, currency devaluation concerns, and profit-taking activities by investors.
The decline in trading activity was evident as the total volume and value of trades witnessed significant declines, reflecting a cautious approach by investors amid the prevailing market turbulence.
Despite the challenges, industry experts urge investors to remain vigilant and adopt prudent investment strategies to navigate the unpredictable market terrain, emphasizing the importance of diversification and long-term investment perspectives in mitigating risks and preserving capital in volatile market conditions.
Nigerian Stock Market Rebounds Last Week as Investors Pocketed N2.115 Trillion
The Nigerian stock market known as the Nigerian Exchange Limited (NGX) closed higher last week with investors gaining N2.115 trillion, a rebound from the previous week when the Exchange closed in the red.
During the week, investors transacted 1.559 billion shares worth N36.497 billion in 42,546 deals, against a total of 2.478 billion shares valued at N47.856 billion that exchanged hands in 54,982 deals in the previous week.
The Financial Services Industry led the activity chart with 1.127 billion shares valued at N18.908 billion that were traded in 19,424 deals. Therefore, contributing 72.27% and 51.81% to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 117.400 million shares worth N1.508 billion in 2,775 deals.
The third place was Consumer Goods with a turnover of 98.422 million shares worth N4.008
billion in 6,322 deals.
United Bank for Africa Plc, FBN Holdings Plc and Guaranty Trust Holding Company Plc were the three most traded equities during the week under review. The three accounted for a combined 389.286 million shares worth N11.757 billion that exchanged hands in 5,372 deals and contributed 24.96% and 32.21% to the total equity turnover volume and value respectively.
The NGX All-Share Index appreciated by 3.79% or 3,864.41 index points from 101,858.37 index points reported in the previous week to 105,722.78 index points last week.
Market Capitalization appreciated by 3.79% to close the week at N57.850 trillion, a N2.115 trillion increase from the N55.735 trillion it closed in the previous week.
The Exchange year-to-date return rose to 41.39%.
Similarly, all other indices finished higher with the exception of NGX CG, NGX Banking, NGX AFR Bank Value, NGX AFR Div Yield, NGX MERI Growth, NGX Industrial Goods, NGX Growth and NGX Sovereign Bond which depreciated by 0.18%, 1.34%, 3.32%, 0.32%, 3.43%, 1.83%, 6.50% and 0.02% respectively.
Thirty-five equities appreciated in price during the week higher than twenty equities in the previous week. Fifty-one equities depreciated in price lower than sixty-eight in the previous week, while sixty-eight equities remained unchanged, higher than sixty-six recorded in the previous week.
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