Investors in the equities market recorded an unprecedented loss of N1.32 trillion last week as the monetary tightening of the Central Bank of Nigeria continues to weigh on the activities of the local bourse.
Negative sentiments permeated across sectors as market participants digested the recent interest rate hike by the CBN and the continued positive outlook of the fixed income and money market space.
The recent primary market auctions saw investors locking in for long-dated Federal Government papers due to rising rates, further impacting market dynamics.
As a result, the benchmark index shed the gains from the previous week, experiencing a 2.33 percent week-on-week decline, which brought it below the 100,000 mark to settle at 98,201.49 points.
Investor sentiment waned amidst the publication of half-year earnings reports and the declaration of lucrative interim dividends by early filers.
Consequently, the market capitalisation of the exchange retreated by 2.33 percent week-on-week to N55.61 trillion.
This adjustment led the year-to-date return of the index to moderate to 31.33 percent. Trading activity last week, however, displayed a positive trend.
The total traded volume rose by 25.85 percent week-on-week to 3.56 billion units. In contrast, the total number of weekly deals declined by 3.18 percent week-on-week to 42,871 trades.
Nevertheless, the total traded value for the week increased by 11.46 percent week-on-week to N47.22 billion.
Market breadth was negative, with 47 weekly losers compared to 25 weekly advancers, indicating a predominance of declining stocks. Sectoral performance throughout the week was notably weak.
The NGX-Industrial Goods Index led the decline, registering losses of 5.89 percent. This was followed by the NGX-Banking Index, which declined by 2.94 percent.
Additionally, the NGX-Insurance, NGX-Oil & Gas, and NGX-Insurance Indexes fell by 0.73 percent, 0.54 percent, and 0.27 percent week-on-week, respectively, driven by sell pressure across these sectors.
Among the notable performers at the close of the week were SOVRENINS, which appreciated by 14 percent, WAPIC and NEIMETH, both rising by 13 percent, OANDO, which increased by 12 percent, and JBERGER, which saw an 11 percent uptick. These gains were driven by positive activities that propelled their price movements.
Conversely, negative investor sentiment led to sell-offs in NSL TECH, which plummeted by 26 percent, OMATEK, which declined by 15 percent, CUTIX, which fell by 14 percent, UPL, which dropped by 12 percent, and ETERNA, which decreased by 10 percent. These stocks emerged as the top losers for the week.
Looking ahead to the coming week, the bearish trend is expected to persist as market players continue to digest the outcome of the recently published economic data and the interest rate hike by the apex bank.
Furthermore, the continued rise in yield levels within the fixed income and money market spaces is likely to maintain the unattractiveness of equities, as investors opt for the appealing yields.
Nonetheless, a mildly positive performance is anticipated on the back of continued earnings releases and attractive dividend declarations by corporations in the coming week.
As the market structure and fundamentals evolve, investors are advised to position themselves in stocks with sound fundamentals to navigate the prevailing conditions effectively.
Global equities
The global equities market traded with mixed sentiments as (1) a batch of disappointing corporate results in the United States and Europe, and (2) economic growth concerns in Asia weighed on sentiments.
Consequently, US equities (DJIA: -0.9%; S&P 500: -1.9%) were poised to close the week lower, as of the time of writing, due to negative reactions to underwhelming earnings reports from major tech companies such as Tesla Inc and Alphabet Inc.
Conversely, European equities (STOXX Europe: +0.1%; FTSE 100: +1.2%) were headed for modest gains as investors balanced the expectations of Federal Reserve interest rate cuts against continued weakness in tech stocks following disappointing earnings.
Asian equities (Nikkei 225: -6.0%; SSE: -3.1%) recorded huge losses, underpinned by a stronger Japanese yen and concerns over China’s economic growth.
Finally, the Emerging Markets index (MSCI EM: -1.4%) and Frontier Markets index (MSCI FM: -1.8%) reflected the negative global market sentiment, with losses in China (-3.1%) and Vietnam (-2.0%) contributing to the respective declines.
