Profit-taking, shift to fixed-income assets weigh on investor sentiment.
Nigeria’s equities market ended the week under sustained selling pressure, extending its decline to five consecutive trading sessions as investors continued to take profits and reposition portfolios towards higher-yielding fixed-income instruments.
The sell-offs across several key counters wiped approximately N2.09 trillion from the market’s capitalisation during the week, underscoring the cautious mood among investors following the market’s strong gains earlier in the year.
The benchmark NGX All-Share Index (ASI) fell by 1.35 per cent week-on-week to close at 239,351.16 points, while total market capitalisation declined to N154.534 trillion from the previous week’s level.
Despite the weekly decline, the equities market retained a strong year-to-date performance, with its YTD return moderating to 53.81 per cent.
The broad-based nature of the sell-off was reflected in market breadth, with only 18 stocks recording gains compared with 58 decliners.
The negative breadth indicated that bearish sentiment was widespread, with declining counters substantially outnumbering advancing stocks as investors adopted a more defensive stance.
Haldane McCall emerged as the best-performing stock of the week, appreciating by 32.30 per cent to close at N3.85 per share. Trans-Nationwide Express followed with a 16.20 per cent gain, closing at N3.30, while Dangote Sugar Refinery rose by 5.19 per cent to N67.90 per share.
The decliners' table, however, was dominated by sharper losses.
International Energy Insurance recorded the biggest decline, shedding 27.26 per cent to close at N3.87 per share. Fortis Global Insurance followed with a 23.95 per cent decline to N2.00, while Royal Exchange fell by 18.49 per cent to close at 97 kobo per share.
Trading Activity Declines
Trading activity also weakened considerably during the week, with investors exchanging 6.242 billion shares valued at N157.764 billion in 186,496 deals.
This represented a notable decline from the previous week, when 12.153 billion shares worth N176.058 billion changed hands in 224,146 deals.
The figures point to a reduction in both trading volume and the number of transactions, suggesting that investors were becoming more selective amid the prevailing market uncertainty.
The Financial Services Industry remained the most actively traded segment, accounting for the bulk of equity turnover during the week.
The sector recorded 5.594 billion shares valued at N56.431 billion across 82,300 deals, representing 89.62 per cent of total equity turnover by volume and 35.77 per cent by value.
The ICT Industry ranked second, with 143.704 million shares worth N29.793 billion traded in 23,740 deals.
The Services Industry followed with 138.672 million shares valued at N1.751 billion across 11,438 deals.
Profit-Taking Weighs on Market
Market analysts attributed the continued weakness to persistent profit-taking, particularly after the strong gains recorded by the equities market over the year.
Investors have also been reallocating portions of their portfolios towards fixed-income instruments offering comparatively attractive yields. Commercial papers, bonds and money market funds have remained among the alternatives drawing investor interest as market participants seek to balance returns with risk.
The rotation has added pressure to equities, with investors becoming increasingly cautious about taking fresh positions in stocks that have already recorded substantial appreciation.
Despite the short-term pressure, analysts maintain that the underlying fundamentals of the Nigerian equities market remain supportive.
Cowry Asset Management Limited expects volatility and caution to persist in the near term but sees room for a more constructive performance over the medium term.
“The Nigerian equities market is expected to remain volatile and cautious in the short term amid continued profit-taking.”
The investment firm, however, said the medium-term outlook remained cautiously positive, citing strong corporate earnings and attractive valuations as factors that could support a recovery in investor interest.
“However, the medium-term outlook remains cautiously positive, supported by strong earnings and attractive valuations, with investors likely to favour fundamentally sound stocks,” Cowry Asset Management said.
The outlook suggests that while the current sell-off could continue as investors lock in gains and reassess portfolio allocations, stocks with strong earnings prospects and solid fundamentals could attract renewed interest once market conditions stabilise.
For now, the five-day losing streak highlights the changing dynamics of the equities market, as investors weigh the opportunity for further stock-market gains against the comparatively attractive yields available in fixed-income assets.