Equities market tumbles by N476bn

The market capitalisation of the Nigerian Exchange Limited dropped below N30tn last week, weeks after it crossed the mark, leading to a loss of N476bn for investors.

This bearish trend started on Monday with investors losing N3bn to close at N 30.391 tn. On Tuesday, the market cap lost N36bn to close the day at N30.355tn. On Wednesday, the pattern was sustained as investors lost N127 billion and the market cap closed at N30.228 trillion.

At the close of the market on Thursday, capitalisation had suffered the biggest dent in the week as it dropped to N29.915tn, while investors lost N313bn. On Friday, the market cap stayed at N29.915tn.

The All Share Index which started the week at 55, 788.37 had lost 872.78 base points to end trading on Friday at 54. 915.39.

The year-to-date returns have also dropped to 6.43 per cent on Friday from 8.15 per cent recorded on March 8.

Similarly, all other indices finished lower with the exception of NGX Consumer Goods and NXG Growth which appreciated by 1.11 per cent and 2.90 per cent respectively while the NGX ASeM, NGX Oil and Gas indices and NGX Sovereign Bond index closed flat.

A total turnover of 853.745 million shares worth N11.841 billion in 18,543 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.023 billion shares valued at N20.221 billion that exchanged hands last week in 18,650 deals.

The financial services industry (measured by volume) led the activity chart with 547.566 million shares valued at N7.100 billion traded in 9,419 deals; thus contributing 64.14 per cent and 59.97 per cent to the total equity turnover volume and value respectively. The conglomerates industry followed with 85.145 million shares worth N134.73m in 717 deals. The third place was the consumer goods industry, with a turnover of 52.981m shares worth N1.584 billion in 2,865 deals.

Reacting to the development, capital market stakeholders blame profit-taking as a major driver of the dip.

Professor of Capital Market, Uche Uwaleke of the Nasarawa State University, Keffi, pointed out that profit-taking was a factor in the equities market trend as well as earning season being over.

He said, “It’s mostly profit taking and the earnings season is over.”

This stance was reiterated by economic and capital market analyst, Rotimi Fakayejo, who said that investors have been taking advantage of the bonus shares that they got recently from the likes of MTN Nigeria.

Fakayejo said, “The market came down by virtue of MTN shedding  N240bn from its market cap. If you discount the loss in MTN, the market will remain strong above N30tn.”

He added that the telecom company, MTN Nigeria lost market cap due to “Profit taking from the public offer  bonus credited to shareholders recently.”

Meanwhile, the Managing Director/Chief Business Officer of Optimus by Afrinvest, Ayodeji Ebo, stated the market was merely correcting itself as well as reacting to the expected drop in economic activities for the first quarter of 2023.

He said, “The Nigerian stock market rose significantly in the last two months and it’s taking a bit of correction. Additionally, the expected slowdown in Q1:2023 economic activity due to the cash crunch may also be affecting market sentiment.”