Profit-Taking Hits Nigeria’s Stock Market As Investors Lose Over N700bn

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NSE-LOGOWith the rout hitting global markets, Nigeria’s stocks headed south last week in the bearish raid as profit-taking activities dominated trading sessions on the bourse.

This was as available data at the weekend showed that several global equities markets logged the steepest declines since 2020 following aggressive interest rate hikes by major central banks to rein in surging inflation stoked recession concerns.

Consequently, US (DJIA: -4.7 percent; S&P 500: -6.0 percent) stocks were on track for their worst weekly loss as hawkish policy actions from the Fed fueled worries of a possible recession. Likewise, European stock markets (STOXX Europe: -3.9 percent; and FTSE 100: -3.2 percent) were on course to close the week in the red as investors reacted negatively to announcements of rate hikes from major central banks.

For the Asian markets, activities were mixed, as the Nikkei 225 (-6.7 percent) suffered a huge loss mirroring the rout on Wall Street. Conversely, the SSE (+1.0 percent) eked out a weekly gain as optimism about fiscal and monetary policy support drove bargain hunting in Chinese tech stocks. cent) and Kuwait (-3.0 percent), respectively.

Consequently, the Nigerian Exchange Limited (NGX)’s All Share Index (ASI) declined 2.7 percent week-on-week (w/w) to close at 51,778.08 points, driven by sell-offs in MTNN (-7.9 percent), BUAFoods (-7.9 percent), Airtel Africa (-1.2%), International Breweries (-15.0 percent) and Zenith Bank (6.35 percent).

Similarly, its market capitalization fell to N27.914 trillion from an opening value of N28.681 trillion, resulting in a decrease of N767 billion. Also, the Month-to-Date (MtD) loss increased to -2.3 percent while the Year-to-Date (YtD) return moderated to +21.2 percent.

The major sector performance of the market was broadly negative, following losses in the Banking (-5.2 percent), Oil and Gas (-1.8 percent), Consumer Goods (-1.2 percent), Insurance (-1.2 percent), and Industrial Goods (-0.1 percent) indices.

Reacting to the weekly performance of the market, market analysts said that with the significant moderation in the prices of bellwether stocks, they expect savvy investors to take advantage of this and make a re-entry into stocks with sound fundamentals and attractive dividends yields on resumption of trading this week.

“However, we do not rule out the possibility of continued profit-taking activities.  As a result, we think the local bourse will likely exhibit a choppy pattern. Therefore, we advise investors to take positions in only fundamentally justified stocks”, Cordros Research said.

Meanwhile, activity levels on the trading floor were weaker than in the prior week, as trading volume and value declined by 48.6 percent w/w and 41.0 percent w/w, respectively. A total turnover of 940.892 million shares worth N11.494 billion in 20,077 deals was traded by investors on the floor of the Exchange, in contrast to a total of 1.831 billion shares valued at N19.494 billion that exchanged hands last week in 21,723 deals.

The Financial Services Industry (measured by volume) led the activity chart with 692.325 million shares valued at N6.220 billion traded in 10,615 deals; thus contributing 73.58 percent and 54.12 percent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 89.872 million shares worth N 246.063 million in 764 deals while the Consumer Goods Industry recorded a turnover of 54.227 million shares worth N1.232 billion in 2,923 deals.

Trading in the top three equities namely United Bank for Africa Plc, Sterling Bank Plc and Transnational Corporation Plc (measured by volume) accounted for 304.837 million shares worth N1.285 billion in 2,103 deals, contributing 32.39 percent and 11.18 percent to the total equity turnover volume and value respectively.

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