Nigerian Exchange Lost N421bn as Investors Rebalance Portfolios
The Nigerian Exchange, NGX, lost more than N421 billion of its opening market cap as investors sought to rebalance their portfolios amidst earnings releases and downbeat sentiments.
The equities market closed the week on a bearish note as sustained sell pressure pushed the Nigerian Exchange All-Share Index (ASI) down by 0.62% week-on-week to 107,821.39 points.
This marked a significant breakdown below the 108,000 psychological level, reflecting weak market internals and subdued trading volumes, Cowry Asset Limited said in a note.
The investment firm explained that the downturn came amid the ongoing corporate earnings season and portfolio rebalancing across market sectors, driven in part by developments in the fixed-income market and mixed earnings reports from listed companies.
As a result of the market downturn, the total market capitalisation declined by N421.28 billion to settle at N67.19 trillion, reflecting a 0.62% contraction over the week.
Trading data revealed that the number of declining stocks outweighed the advancing ones, as the exchange recorded only 26 gainers compared to 60 losers.
Stockbrokers said this imbalance contributed to the weakening market breadth and highlighted the dominance of bearish sentiment. Throughout the week, trading activity was relatively muted as investors engaged in cautious portfolio adjustments and sectoral realignments.
Total traded volume declined by 7.63% to 1.85 billion units, exchanged in 63,090 deals, down from the 2 billion units recorded in 70,853 transactions in the previous week.
Despite the drop in volume, the total traded value saw a slight improvement, increasing by 3.84% to N51.39 billion from N49.49 billion recorded in the prior week. Cowry Asset said this suggests that while overall investor participation remained tepid, there was selective accumulation of stocks with attractive valuations.
Sectoral performance painted a largely negative picture, with four out of the six tracked indices closing in the red.
The Insurance Index emerged as the worst-performing sector, slumping by 4.56% week-on-week as investors offloaded shares in key insurance stocks such as SUNU Assurances and Guinea Insurance.
The Banking sector followed closely, declining by 3.08%, driven by losses in Ecobank Transnational Incorporated (ETI), Sterling Bank, and FBN Holdings.
Similarly, the consumer goods and industrial goods sectors posted marginal declines of 0.36% and 0.51%, respectively, following negative price movements in stocks such as Union Dicon, Northern Nigeria Flour Mills, Multiverse, UPDC, and Cadbury.
On the flip side, the oil and gas sector emerged as the strongest performer for the week, as the Oil & Gas Index posted notable gains, buoyed by positive price movements in Oando, Aradel Holdings, and Eterna.
The commodities sector also recorded some level of resilience, supported by gains in Okomu Oil and other select stocks. Amid the overall bearish sentiment, a few stocks stood out as top gainers for the week.
PZ Cussons led the rally, appreciating by 31.1 %, followed by CAVERTON, which recorded a 22.9% gain. Livestock Feeds and UHOMREIT also posted strong performances, rising by 22.8% and 20.9%, respectively.
Other notable gainers included ABC Transport, which appreciated by 15.4%, benefiting from renewed investor interest. Conversely, SUNU Assurances emerged as the worst performing stock, shedding 19.5% of its value as sell pressure intensified.
Eunisell followed with an 18.7% decline, while Learn Africa, Guinea Insurance, and International Energy Insurance posted significant losses of 16.5%, 15.8%, and 13.6%, respectively.
The sustained downturn in these stocks reflected the general risk-off sentiment in the market. In its weekly projection, Cowry Asset Limited anticipates that the equities market will maintain a mixed trajectory.
While profit-taking activities may persist, there is a likelihood of a slight recovery as investors reposition their portfolios based on earnings results, stockbrokers said.
The influx of audited corporate earnings reports is anticipated to influence market sentiment, particularly for stocks with strong fundamentals. #Nigerian Exchange Lost N421bn as Investors Rebalance Portfolios #Nigerian Exchange Falls by N73bn as Investors Dump VFD, OANDO
