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Fears of Global Financial Contagion Forcing Investors to Move Away from the Equities Market – CBN

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has stated that the renewed fears of a global financial contagion are forcing investors to move away from the equities market to safer assets such as gold, while others seek higher returns in treasury securities with improved yields.

This was highlighted in a recent publication on CBN Communique No 147 of the Monetary Policy Committee Meeting held on Monday 20th and Tuesday 21st March 2023 and personal statements of Members.

With several advanced economy central banks progressing with monetary policy normalization however, CBN posited that the global financial conditions will likely remain tight, thus reinforcing the reassignment of financial portfolios to reflect the risk aversion of investors.

On global economic development, the Monetary Policy Committee noted the risk of a global financial contagion from the recent bank failures in the United States and Switzerland whilst also pointing to the war between Russia and Ukraine as the cause of the critical strains to the commodities and energy markets as supply chain bottlenecks remain. In addition, it says the deteriorating relations between the US, China, Russia and some major oil producers in the Middle East, continue to contribute to increased volatility in the oil market.

In Emerging Markets and Developing Economies, the unfolding tight external financing conditions and shock spillovers from the advanced economies threatened to further dampen the recovery of output growth.

Amongst key Advanced Economy central banks, targeted at moderating global demand pressure, global inflation shows signs of deceleration, monetary policy normalization is progressing unabated, hence, price development across several economies is thus expected to remain high throughout 2023, but to decelerate gradually in 2024.

The CBN also highlights key factors to keep inflation above the long-run target of several central banks to include persisting disruption to energy markets associated with continued war between Russia and Ukraine; high commodity prices; and general disruptions to the global supply chain associated with uncertainties around the COVID-19 pandemic in China and the ongoing tensions between the US and China over Taiwan’s sovereignty.

Across several emerging market and developing economies, it added that inflationary pressures have remained high due largely to rising energy prices, high prices of grains and exchange rate pressures associated with capital flows to high yield US dollar-denominated assets.

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Nigerian Exchange Limited

Nigerian Equity Market Loses N289bn Amid Persistent Sell-Offs

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stock bear - Investors King

Amidst sustained sell-offs, the Nigerian equity market experienced a significant downturn, losing a whopping N289 billion in market capitalization on Monday.

The All-Share Index, a barometer of the market performance, declined by 0.49%, leading to a year-to-date return reduction of 39.27%.

This downturn brought the market capitalization down to N58.88 trillion.

Despite a few gainers, including Ellah Lakes, Morison Industries Plc, and SUNU Assurance, which recorded gains of 10%, 9.93%, and 9.48% respectively, the market was largely dominated by losers.

Dangote Sugar, International Energy Insurance, and Jaiz Bank led the pack of losers with declines of 10.00%, 10.00%, and 9.92% respectively.

The volume and value drivers for the day were the stocks of the National Infrastructure Development Fund, Jaiz Bank, and MTN Nigeria.

Investors traded a total of 306,821,620 shares valued at N11.38 billion in 9,343 deals.

Market analysts at Meristem Research projected a subdued performance for the week, citing anticipation of a rate hike by the Monetary Policy Committee (MPC).

This expected hike could lead to higher rates at the Treasury Bills auction scheduled for Wednesday, potentially driving investors towards higher yields in the fixed-income market.

Consequently, there might be minimal liquidity in the local bourse space, with investors possibly engaging in profit-taking activities on stocks that have experienced significant gains.

The persistent bearish trend in the Nigerian equity market underscores the cautious sentiment among investors amidst prevailing economic uncertainties and policy changes.

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Nigerian Exchange Limited

Nigerian Stock Market Moderates Last Week as Investors Lose N247 Billion

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stock - Investors King

The Nigerian stock market known as the Nigerian Exchange Limited (NGX) moderated by N247 billion last week following weeks of positive close.

During the week, investors exchanged a total of 1.735 billion shares worth N48.755 billion in 45,237 deals, in contrast to a total of 1.773 billion shares valued at N52.867 billion that exchanged hands in 44,713 deals in the previous week.

A further breakdown shows the Financial Services Industry led the activity chart with 1.273 billion shares valued at N31.077 billion that were traded in 23,066 deals. Therefore, contributed 73.36% and 63.74% to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 123.237 million shares worth N1.772 billion in 3,205 deals.

The third place was the Consumer Goods Industry, with a turnover of 104.854 million shares worth
N5.292 billion in 6,166 deals.

United Bank for Africa Plc, FBN Holdings Plc and Access Holdings Plc were the three most traded equities and accounted for a combined 564.882 million shares worth N16.990 billion traded in 8,493 deals. The three contributed 32.56% and 34.85% to the total equity turnover volume and value respectively.

The NGX All-Share Index depreciated by 0.42% or 437.88 index points from 105,085.25 index points recorded in the previous week to 104,647.37 index points last week.

Market Capitalization also depreciated by N247 Billion to N59.169 trillion from N59.416 trillion in the previous week.

Similarly, all other indices finished lower with the exception of NGX Main Board, NGX CG, NGX Banking, NGX Pension, NGX Insurance, NGX ASeM, NGX AFR Bank Value, NGX MERI Growth, NGX Oil and Gas and NGX Industrial Goods which appreciated by 0.68%, 0.43%, 4.19%, 0.13%, 8.92%, 21.81%, 3.93%, 4.13%, 0.30%, and 0.57% respectively while the NGX Sovereign Bond index closed flat.

Fifty equities appreciated in price during the week lower than fifty-five equities in the previous week. Thirty-two equities depreciated in price higher than twenty-four in the previous week, while seventy-two equities remained unchanged, lower than seventy-five recorded in the previous week.

 

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Nigerian Exchange Limited

Nigerian Exchange Adds N74bn, Erases Three-Day Losses

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Nigerian Exchange Limited - Investors King

Following three consecutive days of bearish trading, the Nigerian Exchange Limited (NGX) rebounded on Thursday to register a gain of N74 billion, effectively erasing the previous losses.

The turnaround in market sentiment was a welcome relief for investors who had witnessed a downturn in the equity market.

The All-Share Index saw a notable climb of 0.13 percent to 104,387.47 points while market capitalization surged to N59.02 trillion.

This uptick in market performance propelled the bourse’s year-to-date return to 39.6 percent and highlighted the resilience of Nigeria’s capital market amidst challenging economic conditions.

Market activity saw a significant surge, with trading volume rising by 12.78 percent to 336.82 billion units and the value of transactions appreciating by 35.74 percent to N9.29 billion.

Total deals also saw an uptick, increasing by 6.57 percent to 8,790.

Despite recording more losers than gainers, certain stocks experienced notable gains, with companies like Juli Plc, Transcorp, International Energy Insurance, ETranzact, and Guinea Insurance witnessing substantial increases in their share prices.

Conversely, top decliners included DeapCap, Tourist, Computer Warehouse Group, Caverton, and Omatek.

The banking, insurance, and industrial goods sectors led the market gains, with each posting positive performances.

However, the consumer goods sector experienced a slight decline, while the oil and gas sector remained relatively flat.

Investors showed renewed confidence in the market, with United Bank for Africa emerging as the most traded security by volume, while Nestle led in traded value.

The market’s resurgence comes amidst notable developments, including PZ Cussons’ failed bid to delist from the Nigerian Exchange, impacting minority investors and prompting analysts to assess its potential implications on the company’s future strategies and shareholder value.

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