The Nigerian equities market witnessed a downturn this week, as the NGX All-Share Index (NGXASI) declined by 0.52% week-on-week (WoW) to settle at 97,612.51 points.
This decline has pulled the year-to-date return to 30.54%. The market’s performance was largely influenced by significant sell-offs in large-cap stocks, notably TRANSCORP (-12.1%), FBN Holdings (FBNH) (-10.2%), and United Bank for Africa (UBA) (-12.1%).
Across the sectoral indices, the market presented a mixed performance. The NGX Consumer Goods Index (NGXCNSMRGDS) recorded a modest increase of 0.31% WoW, while the NGX Industrial Index (NGXINDUSTR) edged up by 0.19% week on week.
The NGX Oil & Gas Index (NGXOILGAS) also posted a gain of 0.72% WoW. However, the NGX Banking Index (NGXBNK) plummeted by 7.35% WoW, and the NGX Insurance Index (NGXINS) dropped by 3.50% week on week, dragging the overall market sentiment into the red.
The bearish sentiment persisted throughout the week, culminating in a negative close for the trading week. On the final trading day, the All-Share Index shed 0.37%, closing at 97,612.51 points, down from 97,978.02 points in the previous session.
This decline was primarily driven by selling pressure on key banking stocks, including Ecobank Transnational Incorporated (ETI) (-9.98%), Zenith Bank (-2.76%), UBA (-4.00%), FBNH (-9.31%), and Access Bank (-0.61%), among others. In total, 15 other stocks also contributed to the market’s downward trajectory.
The year-to-date return has now settled at 30.54%, reflecting the challenges faced by the market in recent sessions.
Alongside the decline in the All-Share Index, the overall market capitalization decreased by 0.37%, closing at N55.22 trillion. This represents a loss of N206.63 billion for investors.
Despite the negative performance, market activity for the day was robust. The volume and value of traded shares increased significantly by 143.04% and 104.45%, respectively, reaching 769.09 million units and N15.74 billion.
This surge in trading activity suggests that while bearish sentiments dominated, there was still substantial trading interest in the market.
The current downturn in the banking sector can be attributed to investors’ reassessment of the ongoing bank recapitalization plans. With the Central Bank of Nigeria (CBN) pushing for higher capital requirements, banks are under pressure to bolster their capital bases to meet the new regulatory thresholds.
This has led to uncertainties and concerns among investors about the potential dilution of existing shares and the impact on future profitability.
The broader macroeconomic environment also remains challenging. Nigeria’s economy is grappling with high inflation, exchange rate volatility, and slow economic growth. These factors have compounded the difficulties faced by the banking sector, which is already dealing with non-performing loans and the need for increased capital buffers.
Looking ahead, the outlook for the Nigerian equities market remains uncertain. Given the current challenging macroeconomic conditions and the ongoing bank recapitalization efforts, an extended bearish trend is anticipated in the coming trading sessions.
Investors are likely to remain cautious, closely monitoring developments in the banking sector and the broader economy.