In the week ended March 1, 2024, the local bourse encountered a significant downturn, witnessing the All-Share Index declining by 3.27 percent week on week to 98,751.98 points.
In the review week, the collective wealth of investors declined by N1.83 trillion as the total market capitalization of listed equities nosedived by 3.27 percent week on week to N54.04 trillion. This resulted in a year-to-date return of 32.07 percent.
The prevailing market sentiment was largely influenced by weaker than expected corporate earnings releases and the initiation of the dividend earnings season in the face of the fixed income market’s higher yields outlook, fueled by recent auctions, which contributed to the mildly negative market breadth.
Furthermore, the recent rate hike by the monetary policy committee prompted ongoing portfolio re-balancing among market participants with investors experiencing a collective loss of wealth amounting to N1.83 trillion compared to the previous week.
The local bourse’s recent performance underscores the dynamic interplay of market forces amidst evolving economic conditions.
Despite the bearish sentiment, trading activity surged throughout the week.
The tally of weekly deals accelerated by 15.28 percent to 48,465 deals, while the average traded volume rose by 36 .67 percent week on week to 1.88 billion units.
Moreover, the weekly average value surged northward by 8.12 percent week on week to N34.15 billion.
It was a lacklustre performance week on week across the sectoral front in the review week as the Insurance and Industrial goods sectors bore the brunt of the downturn, experiencing losses of 3.40 percent and 3.87 percent respectively.
Key stocks such as SUNUASSUR, BUACEMENT, and WAPCO drove the downward trajectory in these sectors. Similarly, the Consumer Goods, Oil & Gas, and Banking sectors witnessed declines of 2.62 percent, 1.55 percent, and 0.69 percent respectively, largely due to sell-offs in MTNN, NESTLE, ETERNA, and FIDELITYBNK.
Meanwhile, notable gainers for the week included JULI, PZ CUSSONS, STERLINGNG, and TRANSCORP, witnessing share price advances of +60 percent, +27 percent, +15 percent, and +10 percent respectively. Conversely, MTNN, NESTLE, ETERNA, BUACEMENT, and CONOIL emerged as major losers, experiencing price declines of -19 percent, -18 percent, -11 percent, -10 percent, and -10 percent week-on-week.
In this new week, stock market analysts anticipate a gradual return of positive investor sentiment, driven by corporate earnings scorecards and announced corporate actions.
However, they think the high interest environment resulting from the recent policy rate hike by the CBN to 22.75 percent and rising yields in the fixed income market will likely influence investor behaviour. Regardless, investors are expected to continue re-balancing their portfolios as they carefully assess Nigeria’s macroeconomic data.
Experts at Cordros Research continue to advise investors on taking positions in stocks with sound fundamentals.
On the global front, sentiments in the global equities market were mixed as investors assessed the outlook for the Federal Reserve interest rates following the release of the US personal consumption expenditures index report. Meanwhile, optimism over artificial Intelligence and anticipated stimulus measures lifted sentiments in Asia.
As of the time of writing, US equities (DJIA: -0.3%; S&P 500: +0.1%) reversed last week’s gains as investors parsed (1) easing price pressures from the PCE report and (2) jobless claims data for further clues on the strength of the economy and the outlook for interest rates. Elsewhere, European equities (STOXX Europe: -0.2%; FTSE 100: -0.5%) were on course for a weekly loss as investors digested a batch of economic data including the US PCE report, inflation reports from Germany, France and Spain, amidst Eurozone inflation concerns.
Meanwhile, Asian markets (Nikkei 225: +2.1%; SSE: +0.7%) remained positive, with the Japanese market driven by tech stock rallies following persistent optimism over AI.
Similarly, the Chinese market rose as the weak manufacturing report heightened bets on more robust economic stimulus measures from Beijing next week, supplementing its recent market intervention.
The Emerging market (MSCI EM: -0.7%) index declined, led by bearish sentiments in South Korea (-1.0%), while Frontier markets (MSCI FM: -1.3%) followed suit with losses in Romania (-0.2%) and Morocco (-0.4%).
