Nigerian Equities Market Dips by 0.35% in Volatile Trading Week

In the trading week ended Friday, July 12, Nigeria’s equities market dipped by 0.35% with the Nigerian Exchange Limited (NGX) All Share Index (ASI) and Market Capitalisation decreasing to 99,671.28 points and N56.44 trillion, respectively, from the previous week’s close of 100,022.03 points and N56.58 trillion.

The market saw only one session of positive close, while the rest were negative, resulting in a loss of approximately N140 billion for investors.

This downturn in the equities market comes as a surprise to many who were expecting a more robust performance due to the upcoming second quarter (Q2) results filings and corporate actions anticipated to drive investor interest.

Despite these expectations, the overall sentiment among investors remained tepid, reflecting broader economic uncertainties.

During the review week, buy-side activities favored oil & gas and industrial stocks. However, banking, consumer goods, and insurance sectors saw a significant number of sell-offs.

Banking stocks, in particular, were actively traded due to the ongoing recapitalization exercise, which has created some volatility in the sector.

The elevated interest rates in the fixed income market continued to exert downward pressure on the equities market.

Many investors are opting for fixed income securities over stocks, given the higher yields available, thereby reducing demand for equities and contributing to the market’s decline.

Despite the weekly drop, the year-to-date (YtD) stock market return remains relatively strong at 33.30%.

However, the market’s performance this month has decreased by 0.39%, indicating a cooling off from the more robust gains seen earlier in the year.

The lukewarm attitude of investors towards stocks is partly due to broader macroeconomic concerns, including inflationary pressures and currency fluctuations.

These factors have made investors more cautious, preferring to wait for clearer signals from the Q2 corporate earnings season before making significant investment decisions.

Market analysts suggest that the forthcoming Q2 results and corporate actions could potentially provide the much-needed impetus for a market rebound.

However, they caution that persistent macroeconomic challenges could continue to weigh on investor sentiment.