NGX Loses N111bn as Alpha Seekers Offload FMCG, Banks Stocks
The Nigerian Exchange (NGX) recorded a large daily loss of more than N111 billion Thursday as alpha seekers continued to offload stocks after the interest rate hike, disappointing earnings release for the first half of 2023.
The bearish grip was strong, driven in part by selloffs in banking stocks and disappointing earnings releases by major companies in the fast-moving consumer goods sector.
The recent 25 basis points interest rate hike by the monetary policy committee of the Central Bank of Nigeria (CBN) has started driving yield repricing in the fixed income market. This has pushed the benchmark yield on Nigerian Treasury bills upward, according to market updates from investment analysts.
The average yield on Nigerian Treasury bills, as an example, was pushed upward by 281 basis points to 7%, Cordros Capital Limited told investors via email, triggered by selloffs despite solid liquidity level in the financial system.
Reacting to stock market performance, Futureview Financial Services noted that negative sentiments took hold for the second time this week, causing a downward shift in the market index, as investors continue to react to the new benchmark interest rate of 18.75% announced on Tuesday.
Data from the local bourse showed that the NGX All-Share Index (NGXASI) experienced a decline of 0.31%, sliding to 65,482.91 points, compared to its previous session of 65,991.02 points.
Futureview said Thursday’s market deterioration was primarily influenced by profit-taking activities in significant stocks, including JAPAULGOLD (-9.91%), FBNH (-4.39%), GTCO (-3.10%), PZ (-2.12%), FLOURMILL (-4.55%), and 33 other stocks.
Selloffs on NB share dragged market price downward by 4.76% while ZENITH BANK fell by 0.85%. Specific market development showed that investors decided to further shed their holdings in CADBURY (-9.80%) and UNILEVER (-1.59%) due to their disappointing H1 earnings.
Consequent to selloff bias, the year-to-date return settled at 27.77%. Meanwhile, sectoral performance was predominantly positive, with three out of the five sectors appreciating, according to stockbrokers.
The Insurance and Consumer Goods sectors closed negative, declining by 0.95% and 0.66%, respectively.
On the flip side, the Oil/Gas Sector closed positive, gained 0.88%, driven by price rise in TOTAL and OANDO. Followed by the Banking and Industrial sectors, which both gained 0.02% and 0.01%, respectively.
Meanwhile, market activity improved, with total deals and volume increasing by 9.87%, and 1.76%, respectively, amounting to 8,070 trades, and 509.25 million units. In terms of volume, JAPAULGOLD emerged as the most actively traded stock, with 115.70 million shares worth N129.72 billion changing hands in 471 deals.
Also, the gainers-to-losers ratio, which measures investor sentiment, decreased to 0.37x from 1.33x in the prior session as 14 stocks appreciated, 38 stocks depreciated while 64 stocks closed flat. Overall, equities market capitalisation advanced by N111.15 billion to N35.63 trillion. Nigerian Treasury Bills Yield Rises to 7%