Stock Market Return Falls below Inflation as Investors Lost N868bn

Stock Market Return Falls below Inflation as Investors Lost N868bn

Stockholders’ fortune declined strongly due to heavy selling rallies in the equities segment of the Nigerian Exchange (NGX) amidst earnings releases – which has apparently failed to raise buying sentiment. 

Consequent to profit-taking activities, stockholders experienced value depreciation on some tickers as investors lost N868 billion across bellwether stocks. The selling rallies in the equities segment of the Nigerian Exchange dragged the year-to-date return to 17.92%, according to market data.

At this level, the stock market return has fallen below Nigeria’s headline inflation rate, thus exposing the naira asset to weak naira and rising price levels in the country – a disincentive to investment.

In relative terms, the Nigerian stock market benchmark index declined by 3.10% week on week despite a positive close on Friday – halting eight days of losing streaks amidst second quarter of the financial year 2022 earnings releases.

Some companies’ shares were deflated heavily, losing a fifth of their market valuation.  There were selling pressures across industries – which lowered the sectorial performance.

United Capital Plc (NGX: UCAP), a leading financial and investment services group providing bespoke value-added service to its clients was priced down by 20%. Telecom giant, MTNN lost 17% and JAPAULGOLD valuation dropped by 22%.

In the insurance segment, AIICO lost 16% of its valuation amidst NAICOM’s announcement that some operators will be shut down as part of efforts to recapitalise the industry. TRANSCORP, one of Nigeria’s conglomerates, went down by 14%.

Accordingly, there was a record dip in the NGX key performance indicators, down 3.10% from the previous week’s 0.45% to close at 50,370.25 points and N27.16 trillion respectively. READ: Nigerian Bourse Hits 2008 High on Heavy Bargain Hunting

Sectorial performance was negative, as indices went south last week.  It was noted that NGX Insurance Index and NGX Consumer Goods indexes closed the week in the negative at 4.96% and 3.44% week on week. 

Trailing were the NGX Oil & Gas Index, NGX Banking Index and NGX Industrial Index which recorded losses of 0.95%, 0.43% and 0.22% respectively, Investment firm Cowry Asset Limited note reads.

Elsewhere, stockbrokers said the level of trading activity during the week was upbeat as the total traded volume and value increased by 68.51% and 10.03% week on week to 1.55 billion units valued at N16.29 billion.

Meanwhile, deals for the week under review close at 23,867 from 19,513 in the prior week, according to Cowry Asset note.

Stocks analysts expect the market to trade in a mixed sentiment as the unimpressive macro story remains a headwind to market performance for the moment amid the continued earnings releases; advising investors to trade on companies’ stocks with sound fundamentals and a positive outlook. #Stock Market Return Falls below Inflation as Investors Lost N868bn