Investors in the Nigerian stock market are feeling the heat of rising interest rates in the fixed income market that dampened appetite for equities last week.
Extending its bearish outlook to yet another week, the Nigerian Exchange Limited (NGX) shed N177 billion to close the week in the red territory as investors continued to eject capital from the space in favour the FI instruments.
Business Metrics observed that since the beginning of the week, investors have displayed deafening silence in the stock market, a development that was further compounded during the midweek session by the decision of the Central Bank of Nigeria (CBN) to raise the Treasury bill rates at the primary auction.
The weekly loss recorded on equities was driven chiefly by sell-offs in the shares of Airtel Africa, Flourmill, GTCO and Stanbic which nosedived by 4.7 per cent, 3.5 per cent, 2.9 per cent and 2.4 per cent respectively.
Thus, the All-Share Index (ASI) shed 339.23 points or 0.86 per cent to close lower at 38,921.78 index points from 39,261.01 points the previous week.
Consequently, the month-to-date (MtD), quarter-to-date (QtD) and year-to-date (YtD) losses increased to -0.76 per cent, 2.68 per cent and -3.35 per cent in that order.
Performance across sectors was mixed as the Oil and Gas (+2.3 per cent), and Consumer Goods (+0.2 per cent) indices recorded gains, while the Insurance (-3.4 per cent) and Banking (-1.0 per cent) indices declined. The Industrial Goods index closed flat.
Activity levels defy bears
Even as market experts predicted cautious trading with reduced activity levels for the week, the prediction did not come through as the curve moved northward with trading volumes and value rising by 7.9 per cent and 52.1 per cent respectively.
Specifically, a total turnover of 1.426 billion shares worth N13.073 billion in 19,315 deals were traded by investors on the floor of the Exchange. This contrasted sharply with a total of 1.338 billion share units worth N8.650 billion that exchanged hands the previous week in 19,830 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.136 billion shares valued at N8.201 billion traded in 10,700 deals; thus contributing 79.68 per cent and 62.73 per cent to the total equity turnover volume and value respectively.
The Consumer Goods Industry followed with 76.520 million shares worth N1.383 billion in 3,076 deals, while the third place was Conglomerates, with a turnover of 58.222 million shares worth N186.293 million in 769 deals.
Trading in the top three equities namely FBN Holdings Plc, Access Bank Plc and Wema Bank Plc (measured by volume) accounted for 626.756 million shares worth N4.458 billion in 2,802 deals, contributing 43.95 per cent and 34.10 per cent to the total equity turnover volume and value respectively.
In the bond segment of the market, investors staked N99.809 million on total of 93,019 units valued at N99.809 million in 39 deals compared with a total of 100,152 units valued at N99.670 million transacted last the previous week in 27 deals.
However, activity level declined in the Equity Traded Funds (ETFs) with a total of 2,016 traded units valued at N537,038.08 in 10 deals, lower than the 54,468 units valued at N2.603 million transacted the previous week in 19 deals.
Going into a new trading week, Analysts at Cordros Capital Limited anticipate cautious trading in the bourse following the MPC meeting scheduled for next week.
“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings,” they counseled.
However, PFI Capital Limited investment analysts held that the bulls are expected to return to the trading floor of the NGX next week with respite and put some smiles on the faces of equities investors.
“We expect bullish momentum to return in the next trading session as the equities market still presents decent opportunities for investors chasing positive real return on investments,” they stated in a note to Business Metrics.