Last week, the local bourse experienced another downturn as stakeholders saw position-taking and sell-offs despite the ongoing half-year earnings reporting season following the influx of corporate numbers coming in impressive, mixed and disappointing folds for equity investors.
The negative close serves as a reflection of the impact of government policies and the weakening economy even as the benchmark index retreated amidst negative internals, lower traded volumes and low valuations.
Resultantly, the ASI nosedived by 0.46 percent week-on-week to 97,745.73 points while the market capitalisation of the NGX moved southward by 0.19 percent week on week to N55.49 trillion as investors continued their sectoral realignment heading into a new trading month of August following the negative close of 2.28 percent in July on the back of weak market fundamentals.
This movement was underpinned by waning investor sentiment across sectors which led to the loss of N107.7 billion in four of the five sessions last week while the year-to-date return of the index printed at 30.7 percent.
Across the sectoral front, it was a mixed outing as three out of the five sectors under our purview closed southward.
The NGXConsumer Goods index led the laggards last week by 3.33 percent week on week and was followed by the NGX-Banking and NGXIndustrial indexes which retreated by 0.48 percent and 0.01 percent week-on-week due to price declines in MECURE, NASCON, BERGER, UBA, and FBNH.
In contrast, the NGX-Oil & Gas and NGX-Insurance indexes performed positively, gaining 4.27 percent and 1.59 percent week-on-week, driven by price increases and buy interest in OANDO, ETERNA, MANSARD, and CORNERSTONE respectively.
In addition to the downbeat market performance, the market participation levels waned, mirroring the trend seen in the previous week.
Total traded volume declined by 4.63% to 3.39 billion units. However, the number of trades soared by 4.53 percent week-on-week to 44,814 deals as the weekly traded value also showed upbeat movement, rising by 10.77 percent week-on-week to N52.30 billion. This comes on the back of mixed sentiments triggered by expectations for a further pullback in the market.
At the close of the week, the top-performing stocks included RT BRISCOE (+25%), OANDO (+24%), IMG (+21%), CUSTODIAN (+20%), and MAYBAKER (+19%). On the flip side, stocks such as UNITED CAPITAL (-69%) MECURE (-19%), THOMAS WY (-29%), CHELLARAM (-18%) and NASCON (-13%) faced declines in their share prices, respectively.
Prying into this week, stock market analysts foresee a mixed trend with a possibility of profit-taking.
“Investors are likely to engage in sectoral rotation, capitalizing on stocks that experience pullbacks to position themselves strategically. This rotation strategy is expected to create buying opportunities, especially in anticipation of upcoming releases and dividend announcements from major banking institutions in the corporate reporting season. As the market structure and fundamentals evolve, investors are advised to position themselves in stocks with sound fundamentals to navigate the prevailing conditions effectively,” Cowry Research noted.
Global equities
Global stocks traded with mixed sentiments as investors assessed rate decisions by the Bank of England and Bank of Japan along with weak corporate earnings and economic data releases.
As of the review period, US equities (DJIA: -0.6%; S&P 500: -0.2%) were set to close in the red, extending the losing streak to a second straight week, on negative sentiments from weaker-than-expected economic data (Initial jobless claims and Manufacturing data) and sharp selloffs in heavyweight tech stocks – Nvidia, Moderna and Intel.
In the same vein, European markets (STOXX Europe: -1.6%; FTSE 100: -0.3%) were on track to close lower as the losses on tech stocks and weak US economic data weighed on sentiments amidst the rate cut announcement from the BoE.
In Asia, the Nikkei 225 (-4.7%) declined as investors assessed the BoJ decision to raise benchmark interest rates to 0.25% amid negative sentiments from Wall Street.
Meanwhile, the Chinese market (SSE: +0.5%) advanced following optimism that the Chinese government will ramp up stimulus measures to bolster growth after a string of gloomy economic reports. Elsewhere, the Emerging (MSCI EM: +1.4%) index closed positively following gains in China (+0.5%) while the Frontier (MSCI FM: -0.6%) market index dipped consequently upon bearish sentiments in Vietnam (-0.4%).
