Nigerian Exchange Limited

Nigerian Stock Market Slips Last Week as CBN Raises Interest Rates to Curb Inflation

Published

1 month ago

May 27, 2024

Nigerian Exchange Limited - Investors King

The Nigerian Stock Market dipped last week as the Central Bank of Nigeria (CBN) implemented further tightening measures to address rising inflation.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation both depreciated by 0.52% to close the week at 97,612.51 points and N55.218 trillion, respectively.

This decline in the market coincided with the Monetary Policy Committee (MPC) of the CBN’s decision to hike the policy rate by 150 basis points (bps) to 26.25%.

The committee also retained the cash reserve ratio (CRR) for deposit money banks at 45%, the asymmetric corridor at +100bps/-300bps, and the liquidity ratio at 30%.

“The market remains under pressure as investors pursue safety in the fixed income space. However, given the strong sell-side action in the banking space, we anticipate some buy-side action in the coming week as traders seek to take advantage of some stocks that have been beaten down in recent sessions,” noted analysts from Lagos-based Vetiva Research in their May 24 report.

Despite the overall market downturn, certain sectors showed resilience.

Indices such as NGX MERI Value, NGX Consumer Goods, NGX Oil and Gas, NGX Lotus II, and NGX Industrial Goods saw gains of 1.74%, 0.31%, 0.72%, 0.44%, and 0.19%, respectively.

The NGX ASeM index, however, closed flat.

A closer look at the week’s trading activities revealed that twenty-four equities appreciated in price, down from twenty-eight in the previous week.

Conversely, fifty-three equities saw a decline in price, an increase from fifty-one in the preceding week, while seventy-seven equities remained unchanged, slightly up from seventy-six.

The financial services industry led the trading activity with 1.577 billion shares valued at N30.359 billion traded in 20,697 deals, accounting for 79.41% and 74.56% of the total equity turnover volume and value, respectively.

The conglomerates industry followed with 125.342 million shares worth N1.387 billion in 2,283 deals.

The consumer goods industry also recorded significant activity, with a turnover of 77.327 million shares worth N2.446 billion in 4,916 deals.

Among individual equities, Ecobank Transnational Incorporated Plc, Access Holdings Plc, and United Bank for Africa Plc were the top three in terms of trading volume, accounting for 1.006 billion shares worth N20.115 billion in 6,849 deals.

This represented 50.67% and 49.40% of the total equity turnover volume and value, respectively.

Also, 5,340 units of exchange-traded products valued at N2.350 million were traded in 111 deals, compared to 4,103 units valued at N2.429 million in 110 deals the previous week.

The bond market also saw significant activity, with 82,778 units valued at N80.570 million traded in 18 deals, compared to 9,282 units valued at N8.945 million traded in 24 deals the preceding week.

The MPC’s decision to raise interest rates is part of a broader strategy to rein in inflation and stabilize the economy.

However, the immediate impact on the stock market has been negative, as investors seek safer investments in the fixed income space.

Market participants will be closely watching the coming weeks for potential buy-side opportunities and further economic indicators that could influence trading strategies.

As the Nigerian stock market navigates these turbulent times, the actions of the CBN and global economic conditions will continue to play pivotal roles in shaping market dynamics.

Investors are advised to stay informed and consider the long-term implications of these policy decisions on their portfolios.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigerian Exchange Limited

Nigerian Equities Market Sheds N103 Billion in Three-Day Trading of Last Week

Published

2 days ago

June 24, 2024

Samed Olukoya

In a brief yet impactful trading week marked by Eid-el-Kabir celebrations, Nigeria’s equities market closed in the red as the market shed a total of N103 billion in market capitalization.

Investors navigated through a condensed trading schedule that spanned just three days, with profit-taking activities predominantly affecting key sectors despite selective bargain hunting in others.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) closed the week at 99,743.05 points, reflecting a decline from the previous week’s high of 99,925.29 points.

Similarly, market capitalization dipped to N56.423 trillion, down from N56.526 trillion recorded in the preceding trading period.

Throughout the truncated trading sessions, the market experienced two days of negative closes, contrasting with one day of flat performance.

Analysts attributed the decline primarily to profit-taking activities across critical sectors such as insurance and banking, which overshadowed gains observed in oil & gas, consumer goods, and industrial stocks.

The NGX Oil & Gas Index saw a marginal decrease of 0.21 percent, while the NGX Banking Index dipped by 0.04 percent.

The NGX Insurance Index recorded the steepest decline, falling by 1.41 percent during the week.

On the other hand, the NGX Consumer Goods Index rose by 0.29 percent, and the NGX Industrial Index saw a modest increase of 0.10 percent.

Despite the downturn in market performance for the week, the year-to-date (YtD) return moderated to 33.39 percent, indicating a resilient overall performance in 2024.

Month-to-date (MtD), the market managed a slight uptick of 0.43 percent, underscoring the mixed sentiment and cautious trading observed among investors.

Market analysts and stakeholders emphasized the impact of profit-taking in driving the market’s decline and suggested that the upcoming weeks could see renewed activity depending on economic indicators and investor sentiment.

As Nigeria’s equities market continues to navigate various economic dynamics, stakeholders remain optimistic about potential recovery and growth opportunities amid evolving market conditions.

The holiday-shortened trading week underscored the volatility and resilience of Nigeria’s equities market, highlighting both challenges and opportunities for investors in the coming sessions.

Nigerian Exchange Limited

FBN Holdings, Fidelity Bank Lead Trades as Nigerian Stock Market Closes Flat

Published

5 days ago

June 21, 2024

Samed Olukoya

For the first time in weeks, Nigeria’s equities market closed flat on Thursday as investors adopted a cautious approach, taking a “wait-and-see” stance.

Despite active trading in major stocks such as FBN Holdings, Fidelity Bank, Transcorp, Access Holdings, and AIICO, the market showed no significant movement.

On Thursday, investors exchanged 1,299,961,984 shares worth N25.326 billion in 8,364 deals on the Exchange.

However, the trading activity did not translate into a market shift.

The NGX All-Share Index (ASI) and Market Capitalisation, which stood at 99,842.19 points and N56.478 trillion on the preceding trading day, closed Thursday at 99,842.94 points and N56.479 trillion, respectively.

This static closure occurred despite notable performances from stocks like Champion Breweries and Chams, which rallied.

Conversely, Transcorp Hotels Plc, NEM Insurance, and Fidelity Bank topped the list of laggards.

“We anticipate a mixed trading session with potential buy-side pressure in key names that could steer the market to a green close,” stated analysts from Lagos-based Vetiva Research in their post-trading note. “Investors are expected to monitor movements in high-performing stocks as well.”

Related developments highlighted the challenges facing investors. Rising diesel prices have surged by 66%, hitting the Northeast hardest.

The Naira remains weak at the official market despite rising external reserves, and prime office tenants face dilemmas with dollar-rents surging 200% in Naira value.

The flat close on Thursday underscores the cautious sentiment prevailing among investors in Nigeria’s equities market.

The market’s performance continues to reflect broader economic uncertainties and investor strategies focusing on stability and risk management.

Nigerian Exchange Limited

Foreign Equity Trading in Nigeria Jumps 437%, Reaches N334 Billion in Early 2024

Published

6 days ago

June 20, 2024

Samed Olukoya

Nigeria’s stock market has seen a remarkable surge in foreign investor activity, with equity trading by foreign investors skyrocketing 437% in the first four months of 2024.

This growth has pushed the total value of foreign equity trades to N334.01 billion, a significant increase from N62.18 billion during the same period in 2023.

Data from the Nigeria Exchange Limited (NGX) reveals that between January and April 2024, Nigerian stock investors exchanged equities valued at N1.894 trillion, a sharp rise from N721.44 billion recorded in the corresponding period of the previous year.

Foreign investors accounted for 17.63% of this total, while domestic investors dominated the market with 82.37%, trading N1.560 trillion worth of equities.

The increased foreign participation peaked in April 2024, with foreign investors trading N120.83 billion worth of stocks, representing 34.90% of the total value traded that month.

This surge highlights a growing confidence in Nigeria’s equity market despite broader economic challenges and a competitive fixed income market.

Analysts attribute this spike in foreign equity trading to various factors, including attractive stock valuations and improved regulatory frameworks.

“We expect continued interest in fundamentally sound stocks,” noted analysts at Comercio Partners, highlighting the positive market return of 33.64% by mid-June 2024.

Despite the attractiveness of fixed-income yields, particularly with Treasury bill rates reaching as high as 23.3% for one-year T-bills, participants remain drawn to equities, seeking growth in undervalued stocks.

Meristem research analysts predict a mixed performance in the equities market, driven by positive momentum and cautious trading.

The influx of foreign capital comes as a positive sign for Nigeria’s economic outlook, reflecting investor confidence in the nation’s regulatory and market reforms.

The NGX has been proactive in boosting market accessibility, recently launching a USSD platform to provide real-time stock market information, a move aimed at enhancing financial inclusion and market participation.

Prominent stockbroking firms have also played a crucial role in this trading boom.

CardinalStone Securities Limited led the market by trading stocks worth N197.535 billion, followed by Stanbic IBTC Stockbrokers Limited and United Capital Securities Limited.