The Nigerian stock market closed in negative territory last week due to widespread selloffs in blue-chip companies across various sectors, despite a decline in fixed-income yields. Typically, the stock and bond markets move in opposite directions, but this trend was disrupted by the selling pressure on large stocks like Transcorp, Access Holding Company, and MTNN, which recorded significant declines of -17.7%, -6.8%, and -3.2%, respectively. The market’s bearish sentiment was further fueled by dividend payouts that fell short of investor expectations.
Market analysts explained that this downturn could be attributed to a correction phase, with funds leaving the market as investors reassess their positions. However, some investors are seizing the opportunity created by the market pullbacks, looking to take advantage of lower stock prices. The market is expected to remain volatile, especially with the anticipation of upcoming earnings reports and dividend announcements, which could influence future market direction.
In terms of market performance, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) decreased by 1.2% Week on Week, closing at 106,533.26 points, down from 107,821.38 points the previous week. Investors collectively lost over N476 billion, as the market capitalization dropped to N66.717 trillion from N67.193 trillion. This decline is reflected in weaker trading activity, with both volume and value decreasing by 1.9% and 8.0% respectively.
Looking ahead, analysts expect the market’s volatility to persist as investors navigate through delays in bank and insurance earnings filings and monitor yield movements in the fixed income market. Sectoral performance remained largely negative, with the banking, insurance, consumer goods, and oil & gas sectors all experiencing declines. Despite this, experts suggest that investors may continue to reposition their portfolios, eyeing undervalued stocks and preparing for upcoming corporate earnings announcements.
SOURCE: VANGUARD