Investment analysts are optimistic that the Nigerian stock market will rebound in the coming weeks following a recent selloff that wiped N5.643 trillion from investors’ wealth.
In an interview with reporters on Sunday, the analysts attributed the expected recovery to improving investor sentiment and the upcoming release of half-year corporate earnings, which could help stabilize the market after its recent correction.
The Nigerian Exchange Ltd. (NGX) All-Share Index and market capitalization declined by 3.59 percent, closing the week at 235,941.27 points and N151.327 trillion, respectively. This compares to 244,738.74 points and N156.970 trillion recorded the previous week.
Mr. Umaru Mathew, Head of Capital Market, Commodities, and Dealers at Equity Capital Solutions Ltd., explained that the downturn was a natural correction following an extended bullish run. He noted that profit-taking by investors and weaker-than-expected earnings from some banks contributed to the decline.
“The market is simply balancing itself. We’ve seen strong performance recently, and what’s happening now is largely driven by profit-taking activities. Many investors expected the banking sector to deliver excellent results that would boost market sentiment, but only a few banks met those expectations,” he said.
Mathew also mentioned that some investors shifted funds to the money market, where yields remain attractive and risks are comparatively lower.
“The money market still offers competitive returns, and some investors see it as a safer option. However, there are still fundamentally sound stocks with attractive valuations in the equities market,” he added.
He further stated that the current weakness should not be solely attributed to the migration to the T+1 settlement cycle, emphasizing that market forces and investor behavior remain the primary drivers of price movements. Nonetheless, he expressed confidence that the market would gradually stabilize.
“For the first one or two trading sessions next week, we may see the same trend continue. There will still be some pressure on prices as investors take profits. However, some stocks are already approaching support levels, and we could see renewed buying interest. As we enter July and the half-year earnings season, fresh information will help guide investor decisions. We expect some stocks to find support and recover gradually, leading to broader market stability within the next week or two,” he said.
Meanwhile, Mr. Aruna Kebira, Managing Director of Globalview Capital Ltd., noted that investors are repositioning ahead of the proposed Dangote Refinery public offer. Rising money market yields have also encouraged a shift away from equities.
“Most investors are preparing for the Dangote public offer. Many are moving funds out of the capital market because they need to keep money available for the offer. The money market offers fixed returns on both capital and interest, unlike the capital market, where returns fluctuate with market conditions. This is prompting some investors to shift funds from equities,” he said.
Kebira was optimistic that the market could rebound once listed companies start releasing their second-quarter earnings.
During the week, a total of 3.075 billion shares valued at N254.614 billion were traded in 287,157 deals. This contrasts with 4.964 billion shares worth N207.521 billion exchanged in 235,966 deals the previous week.
The Financial Services Industry dominated trading, accounting for 2.074 billion shares worth N64.490 billion in 121,981 deals, contributing 67.44 percent of volume and 25.33 percent of value.
The Services Industry followed with 175.743 million shares valued at N2.759 billion, while the Consumer Goods Industry traded 133.375 million shares worth N12.680 billion.
Trading in Access Holdings Plc, Sterling Financial Holdings Plc, and Jaiz Bank Plc accounted for 819.234 million shares valued at N12.247 billion across 21,809 deals, representing 26.64 percent of total volume and 4.81 percent of total value.
Market breadth was negative, with only 11 equities rising compared to 40 in the previous week. Seventy-eight equities declined, and 57 remained unchanged.
Top gainers included Cornerstone Insurance, Academy Press, Conoil, Neimeth Pharmaceuticals, and Ikeja Hotel. The top losers were International Energy Insurance, First HoldCo, John Holt, Nigerian Aviation Handling Company, and Zichy Agro Industries.
Additionally, the NGX suspended trading in Fortis Global Insurance Plc shares to enable shareholders’ record reconciliation ahead of the listing of reconstructed shares. The suspension will also facilitate the determination of shareholders entitled to the reconstructed shares.
