NGX Return Dips to 56% Over Selloffs in BUA, Dangote, Unilever
The Nigerian Exchange (NGX) year-to-date return moderated to 56.1% as sell pressure weighed on the market capitalisation of BUA Foods, Dangote Sugar Refinery, and Unilever Nigeria last week.
The stock market extended its bearish run, with the NGX All-Share Index (ASI) declining by 1.14% week-on-week to 242,770.94 points, while market capitalisation fell by approximately N1.9 trillion to N156.72 trillion.
Consequently, the market’s year-to-date return moderated to 56.01%. The decline points to continued profit-taking, with investors increasingly cautious around elevated valuations and near-term catalysts.
The breadth of the sell-off also remained weak, as 59 stocks declined against 26 gainers, Cowry Asset Limited said in its investors’ note, producing a breadth ratio of 0.44x and signalling that the negative sentiment was relatively broad-based rather than concentrated in a few large-cap counters.
Stockbrokers said trading activity, however, presented a mixed picture, suggesting that the decline occurred amid heightened participation rather than a complete withdrawal of investors.
While the number of deals fell by 14.40% w/w to 224,466, trading volume surged by 126.76% to 12.15 billion shares, while transaction value increased by 26.67% to N176.29 billion.
The divergence between fewer deals and substantially higher volume indicates that market activity was concentrated in larger transactions, potentially reflecting institutional repositioning and portfolio adjustments.
Importantly, the sharp increase in volume amid a falling index could also suggest that selling pressure was becoming more pronounced in selected counters. Sectoral performance reinforced the broad-based nature of the weakness, with all tracked sectors closing in negative territory.
The Insurance sector recorded the steepest decline, falling 2.72%, driven by sell-offs in CORNERST, MANSARD and WAPIC, which more than offset gains in INTENEGINS and SOVRENINS.
Consumer Goods followed with a 1.91% decline, pressured by UNILEVER, DANGSUGAR and BUAFOODS. The Banking sector fell 1.48%, reflecting losses in FIRSTHOLDCO, ETI and ZENITHBANK, while Industrial Goods declined 1.22% on weakness in AUSTINLAZ, HBMNG and CUTIX.
The Oil & Gas sector was comparatively resilient, declining only 0.07%, despite losses in OANDO, JAPAULGOLD and ETERNA.
Investment firm Cowry Asset Limited told investors in an update released that at the individual stock level, performance remained highly divergent, highlighting pockets of buying interest despite the broader risk-off tone.
TRANSEXPR emerged as the strongest performer, gaining 32.1%, followed by INTENEGINS (+31.7%), SOVRENINS (+13.8%), CHAMS (+12.3%) and CWG (+9.7%).
Conversely, AVACAP led the decliners with a 34.5% decline, followed by UNILEVER (-18.9%), ZICHIS (-15.1%), THOMASWY (-14.3%) and DANGSUGAR (-11.6%).
“The magnitude of the weekly movements among these counters suggests that stock-specific factors, profit-taking and liquidity considerations remain important drivers of individual price performance, even as broader market sentiment weakens”, Cowry Asset Limited said in its market update.
“We expect the market to remain cautious and highly selective in the near term, as investors continue to lock in gains following the substantial appreciation recorded earlier in the year.
“The combination of a 56.01% YTD market return, a breadth ratio of only 0.44x and declines across all major sectors points to a market undergoing consolidation rather than a uniform deterioration in fundamentals”, Cowry Asset Limited told investors in its note.
The firm said the sharp increase in trading volume and transaction value suggests liquidity remains available, creating room for bargain hunting in fundamentally stronger counters.
Corporate earnings, liquidity conditions, macroeconomic developments and valuation considerations are likely to remain the key determinants of market direction, with investors expected to favour stocks offering stronger earnings visibility and more compelling risk-adjusted valuations, the investment firm stated. Money Market Rates Mixed as Banks Put Excess Cash with CBN
