Latest data of Domestic and Foreign Portfolio Investors’ Report in the Nigerian equities market in August released by the Nigerian Exchange Limited indicated a decline of 22.8 percent month-on-month (m-o-m) to N379, 52 billion in August 2024 as against N491.61 billion in July 2024.
Analysis of the figures shows that domestic investors contributed 84.9 percent of gross transactions amounting to N322.05 billion, however, the number translated to a 25.8 percent drop when compared to N434.09 billion reported in July. This reflects contraction of 33.5 percent m-o-m and 12.9 percent m-o-m across inflows from retails and institutional investors respectively.
Similarly, collections from foreign portfolios which contributed 15.1 percent of gross transactions edged lower by 0.1 percent m-o-m to N57.47 billion in August as against N57.52 billion in July.
Unfortunately, the figures indicate the third month of consecutive months of decline investment contraction on the equities market has attributed the dual impact of higher yields in the fixed-income market and lingering foreign exchange liquidity constraints.
Meanwhile, transactions on the equities market last week witnessed a modest recovery as the All-Share Index (ASI) posted a weekly gain of 0.09 percent to close at 97,606.63 points, signaling a renewed bullish sentiment after previous week’s profit-taking activities.
The market rebound was driven by selective buying across sectors, as investors responded to attractive entry points in key mid and large-cap stocks. In the same manner, the market capitalisation posted marginal increase by 0.09 percent week on week to N56.09 trillion resulting in a N49.53 billion weekly gain for equity investors even as the year-to-date return of the index advanced to 30.54 percent.
Market momentum was relatively weak in the face of higher traded volumes during the week, fuelled by rebalancing activities across small, mid, and large-cap stocks. As a result, the weekly trade value nosedived by 76.24 percent week-on-week to N31.51 billion, while the traded volumes this week reversed last week’s decline by 3.92 percent week on week to 2.97 billion shares, all executed in 42,482 deals— a 7.5 percent increase from the previous week.
Sectoral performance was mixed during the week as 3 of 5 sectors under our purview posted weekly gains. Thus, the week closed with gains in sectors such as Banking Insurance and Oil & Gas respectively.
However, overall trading activity remained subdued, reflecting cautious sentiment ahead of key macroeconomic reports, including the September 2024 inflation figures.
Contextually, the Oil & Gas index led the gainers’ chart this week by 1.57 percent week on week on the back of gains seen in SEPLAT. The Banking and Insurance indices followed with 0.47 percent and 0.08 percent weekly gains which were propelled by rally in FBNH, LASACO (following the lifting of suspension on the trading of the shares) and PRESTIGE. On the other hand, the Consumer Goods and Industrial Goods indices recorded losses by 1.25 percent and 0.13 percent week on week which were propelled by adverse price movement in TRIPPLEG, TANTALIZER, UPDC, GUINNESS, INTBREW and HONEY FLOUR respectively.
Looking at the top advancers and decliners for the week, MECURE up by 20 percent, UPL 18 percent, LASACO 17 percent, FIDELITYBK 13 percent, and PZ CUSSONS 12 percent as they emerged the top spot of attraction for equity investors while stocks such as TRIPLE G declined by 60 percent, DAARCOMM 25 percent, AFRIPRUD 13 percent, REGALINS 12 percent and TANTALIZER 10 percent in that manner.
Commenting on the market activities during the week, Researchers at Cowry Assets Management Limited said the modest gains recorded in this trading during the week reflect investor confidence slowly returning to the market, with expectations of further rebounds supported by anticipated earnings releases and the impact of government reforms on economic growth.
They submitted that they anticipate the current trend of mild gains to continue on the local bourse, buoyed by the release of Q3 earnings report by majorly the early filers. They however, advise investors to focus on fundamentally sound stocks.
