Weak sentiment continues in the equities sector of the Nigerian Exchange Limited (NGX), with the local market posting its second consecutive weekly loss last week as the risk of an economic slump rises.
As a result, the market capitalization and NGX All-share index both declined by 0.14 percent to end the week at 51,705.61 and N27.875 trillion, respectively.
Similar to this, all other indices ended lower, with the exception of the NGX CG, NGX Premium, NGX Banking, NGX Pension, NGX Afr bank value, NGX Oil/Gas, and NGX Lotus indices, which increased by 0.86 percent, 1.5 percent, 0.33 percent, 0.4 percent, 0.16 percent, 0.32 percent, and 0.55 percent, while the NGX Asem and NGX Growth indices ended
The weekly loss was mostly caused by profit-taking operations at Bua cement (-3.2%), Dangote cement (-0.7%), NB (-5.5%), and WAPCO (-3.2%). As a result, the return for the Month and Year to Date ended up being 2.4% and 21%, respectively.
Ambose Omordion, the head of Investdata Consulting’s research office, bemoaned the fact that, despite persistent concerns about a worldwide recession, oil prices have continued to fluctuate on the international market, currently trading at $109.9 a barrel.
He claims that there is a real concern that the persistently high oil costs will worsen inflationary pressures globally and create a bleak economic outlook, which will further weaken the world economy. He continued by saying that the worry is also impacting central banks’ monetary policy as they work to neutralize the effects of the Russia-Ukraine war on the world economy in order to prevent an economic downturn.
According to Omordion, Nigeria’s fixed income market and investment rates are seriously threatened by the country’s growing inflation.
He did, however, forecast that the event might be a sign that money will soon stop flowing into the equity market as institutional investors rebalance their holdings.
Cordros Capital analysts added: “We expect the choppy trading pattern that emerged this week to continue in the coming week, as investors continue to cherry-pick equities with alluring dividend yields, while at the same time remaining cautious about leaving gains in the market.
Despite this, we urge investors to only invest in blue-chip stocks because the weak economic story continues to be a major drag on corporate profitability.
“This week’s trading pattern was varied as we observed days of decreases followed by strong activity,” added Vetiva Dealing and Brokerage.
“As investors continue to cherry-pick appealing shares across the board, we foresee a similar trade pattern with modest action next week.”
Further analysis of the transactions from the previous week revealed that 22,350 investor deals totaling 1.1 billion shares worth N13.7 billion were recorded on the exchange’s trading floor.
However, the number of shares moved was less than the 940.9 million units worth N11.5 billion that were traded in 20,077 transactions as of July 17, 2022.
With 806.824 million shares worth N6.1 billion moved in 11,071 deals, or 71.9 percent of the overall stock turnover, the financial services sector led the activity chart (measured by volume).
Following was the oil and gas sector, which saw 95.031 million shares traded for N1.4 billion in 1,849 transactions. The conglomerate good industry came in third with a turnover of 66.7 million shares worth N169.5 million in 733 transactions.
The top three stocks, FCMB Group Plc, United Bank for Africa Plc, and Oando Plc, had 407.7 million shares worth N2 billion change hands in 2,181 transactions, or 36.4% of the total equities activity.
Exchange Traded Funds (ETF) were traded in a total of 1,591 units worth N10.8 million last week in 18 deals as opposed to 2,722 units worth N1.5 million that were traded in a total of 10 deals last week.
In total, 44,746 bonds worth N44.8 million were traded last week in 29 deals as opposed to 5,972 bonds for N6 million traded in total last week. The number of stocks that increased throughout the week was 16, up from 13 the week before.
Sixty-five stocks declined more than the 51 stocks reported the week before, while 84 stocks held steady and declined less than the 92 stocks recorded the week before.