Investors Lose N479 Billion As The Economy Struggles To Cope With The Electoral Weight

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Investors lost N479 billion in one week due to a panicked sell-off of stocks at the Nigerian Exchange Limited (NGX) caused by political unpredictability. 

The number of shares traded also decreased by 16.6%, with investors transacting 853.7 million shares worth N11.8 billion in 18,543 transactions on the Exchange’s floor, as opposed to 1 billion shares worth N20.2 billion in 18,650 transactions on March 10, 2023.

The market capitalization decreased by N479 billion from N30.395 trillion to N29.916 trillion last week, while the all-share Index depreciated by 879.51 points or 1.6% to 54, 915.39 from 55, 794.41, where it closed for trade on Friday, March 10, 2023.

The market indexes were particularly pulled by sell pressure on MTNN (-4.2%) and GTCO (-7.2%), which also moderated the month-to-date (MTD) and year-to-date (YTD) returns to -1.6% and -7.2%, respectively.

The other indexes also ended down, with the exception of the NGX Consumer Goods and NGX Growth indices, which increased by 1.11 and 2.90 percent, respectively. The NGX ASeM, NGX Oil and Gas, and NGX Sovereign Bond indices also ended flat.

Vetiva Dealings and Brokerage analysts responded to the results as follows: “The recoveries seen in counters across the board were not sufficient in cancelling out the losses already posted this week, as YTD return fell by 154bps this week.”

“We still expect mixed trading in the market in the coming week, as investors cautiously cherry-pick stocks in the equity market, while the decision of the MPC next week will also be keenly anticipated.”

Cordros Capital stated that: “Looking ahead, we believe investors will focus on the outcomes of the bond auction and the MPC meeting scheduled to hold next week (this week) to gain further clarity on the movement of yields in the Fixed Income (FI) market.”

“If the MPC increases the benchmark policy rate and there is a pass-through impact on yields in the FI market, there could be a realignment of investments between markets that would pressure the performance of the equities market.”

“As a result, we expect cautious trading from domestic investors in the short term. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the uninspiring macro story remains a significant headwind for corporate earnings.”

The financial services sector led the activity chart (measured by volume) with 547.5 million shares worth N7 billion moved in 9,419 deals, making up 64.1% of the overall stock turnover volume.

The conglomerate sector came in second with 85.1 million units valued at N134.7 million transacted over 717 trades. With a turnover of 52.9 million shares worth N1.6 billion in 2,865 deals, the consumer goods sector came in third.

Transnational Corporation Plc, Zenith Bank Plc, and Sterling Bank Plc were the top three stocks traded, accounting for 226 million shares worth N2 billion in 2,613 transactions, or 26.47 percent of the total equity turnover.

In addition, 6,224 Exchange Traded Products (ETPs) worth N1.5 million were exchanged in 56 deals as opposed to 11,382 ETPs worth N1.9 million that were traded in 74 deals last week.

In the previous week, 98,883 bonds worth N94.1 million were also traded in 31 trades, as opposed to 54,802 bonds worth N55.7 million that were all transacted in 14.

While 47 stocks declined more than 41 in the previous week, 19 stocks appreciated this week less than 22 stocks did the week before.

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