NGX Falls By N409bn as Zenith, GTCO Shares Plunge

NGX Falls By N409bn as Zenith, GTCO Shares Plunge

The Nigerian Exchange (NGX) equities market capitalisation shed by more than N409 billion in a week due to selloffs in Zenith Bank, and GTCO shares, dragging the Banking Index lower by 3.24%.

While the surging inflation rate raised risk on naira assets in the fixed income market, the equities market year to date of 31.5% stays far ahead of the annual inflation rate of 25.80%.

Also supporting the selloffs in the local bourse was the FTSE Russell downgrade of the Nigerian index last week, citing the sustained inability of foreign investors to repatriate funds offshore.

FTSE Russell, a global index provider, announced a decision to downgrade Nigeria’s equity index from ‘Frontier” to “Unclassified” market status on September 18, 2023, on the back of Nigeria’s ongoing foreign exchange (FX) crisis.

This means that Nigerian stocks will be excluded from the FTSE Frontier Index Series, the FTSE Frontier 50 Index, and others, Cowry Asset Management Limited said in a note to investors.

Recall that the MSCI index postponed its plan to downgrade the Nigerian index after a devaluation of naira in June.

Last week, the domestic equities market closed the week negative as the NGX All-share index lost 1.1% to close at 67,395.74 points.  Consequently, market capitalisation shed ₦409.2 billion to ₦36.9 trillion, while YTD return declined to 31.5% from 33.0%.

Stockbrokers reported that the average traded volume witnessed a modest weekly increase of 14.17%, settling at 2.93 billion units. The weekly average value displayed a more substantial uptick, with a 7.80% increase, reaching a value of N47.45 billion compared to the preceding week’s figure of N44.01 billion.

Major drag came from profit-taking activities in ZENITHBANK (-10.0%), GTCO (-8.1%), DANGSUGAR (-10.8%), and MTNN (-1.5%) shares.

On the gainers chart, OANDO surged by 43%, closely trailed by CORNERST at 13%, and NNFM at 12%. In contrast, ABCTRANS faced a downturn of 34%, while ETRANZACT and LEARNAFRCA experienced respective declines of 27% and 15% due to negative price movements.

Stockbrokers said they anticipate cautious trading on the bourse next week in the absence of strong positive triggers to boost investors’ appetite for risk assets. The Insurance sector emerged as the lone gainer this week by 0.46% week on week. This was primarily attributed to price appreciations in CORNERST and CHIPLC.

On the contrary, the banking index was hardest hit, lost 3.24% week on week in reaction to the FTSE Russell’s downgrade which resulted in pressured sell-offs in ZENITH, GTCO. Also, the Oil & Gas, Consumer goods and Industrial sectors also exhibited signs of decline, albeit to a lesser extent, with losses of 2.02%, 1.84% and 0.28% respectively. 

“In the upcoming week, market sentiment is likely to be diverse as investors engage in bargain hunting ahead of the highly anticipated third-quarter earnings season which draws closer”, Cowry Asset Management told investors. Naira Devaluation Deepens Economic Crisis in Nigeria