NGX Lost N1.83trn as Earnings Miscarriages Dent Sentiment
The Nigerian Exchange (NGX) equities market capitalisation shed more than N1.83 trillion as investors’ sentiment weakened following foreign exchange related losses that damaged to corporate earnings.
Big listed companies that posted losses have been experiencing selloffs over investors’ fear of rapid value loss. Companies in the fast moving consumer goods sector have been positing large earnings decline after naira devaluation. Yet, analysts maintained their earnings outlook remains uninspiring.
In its audited financial statement, MTN Nigeria Plc posted an annual loss of N137.0 billion in 2023 from a positive territory of N348.7 billion in 2022 due to N740.4 billion FX loss. In the previous week, the local bourse lost more than N2.1 trillion to bearish trade, pushing the last two weeks’ loss to N4 trillion.
Investors were noted to also weigh the impacts of policy or benchmark interest rate adjustment on rates on fixed interest securities as yield remained elevated in the treasury, OMO and bond market.
The equities market year-to-date return declined sharply to 32.07% from a peak of 41.4% in 2024. Stockbrokers told investors in their market updates that the Nigerian Exchange All-Share Index (ASI) declined by 3.27% week on week to 98,751.98 points.
Selloffs which persisted for the second week were influenced by weaker-than-expected corporate earnings releases. Despite the bearish sentiment, trading activity surged throughout the week.
Activity levels were positive as trading volume and value increased by 36.7% and 8.1, respectively.. The market recorded a 15.28% surge in deals to 48,465 deals, while the average traded volume rose by 36.67% week on week to 1.88 billion units, Cowry Asset said in its update.
Moreover, the weekly average value surged northward by 8.12% week on week to N34.15 billion. It was a lacklustre performance week on week across the sectoral front.
The insurance and Industrial goods sectors declined by 3.40% and 3.87% respectively. Key stocks such as SUNUASSUR, BUACEMENT, and WAPCO drove the downward trajectory in these sectors.
Similarly, the Consumer Goods, Oil & Gas, and Banking sectors fell by 2.62%, 1.55%, and 0.69% respectively, largely due to sell-offs in MTNN, NESTLE, ETERNA, and FIDELITYBNK. The market was not without any gainers. Top performing stocks include JULI, PZ CUSSONS, STERLINGNG, and TRANSCORP.
Juli gained 60% followed by PZ with a 27% uptick. Sterling Plc rose by +15%, and Transcorp gained +10 % respectively. Conversely, MTNN, NESTLE, ETERNA, BUACEMENT, and CONOIL emerged as major losers, experiencing price declines of -19%, -18%, -11%, -10%, and -10% week-on-week.
Overall, the equities market capitalisation of the Nigerian Exchange nosedived by N1.83 trillion in a week to close at N54.04 trillion. Market analysts at Cowry Asset Limited anticipate a gradual return of positive investor sentiment, driven by corporate earnings scorecards and announced corporate actions.
However, the investment firm thinks the high-interest environment resulting from the recent policy rate hike by the CBN to 22.75% and rising yields in the fixed income market will likely influence investor behaviour.
In the near term, analysts at Cordros Capital Limited also indicated that they anticipate cautious trading from domestic investors in response to the recent interest rate decision by the MPC and the uninspiring corporate earnings released thus far. #NGX Lost N1.83trn as Earnings Miscarriages Dent Sentiment Naira Suffers Big, CBN Goes Ballistic Against FX Whales
