Equities market drops by N1.12trn in two months
The local equities market has dropped by N1.12 trillion between July and August 2024, as investors’ profit-taking persisted in some blue-chip companies listed on the Nigerian Exchange Limited (NGX).
The downward trend in the two months under review is coming on the backdrop of a hike in the Monetary Policy Rate, leading investors to divest into lucrative high yield Treasury Bills (T-Bills) as the Central Bank of Nigeria sustained its aggressive moves to tackle rising inflation rate.
The market capitalisation in July 2024 dropped by N1.09 trillion or -1.92 per cent to close at N55.514 trillion from N56.602 trillion it opened for trading, while in August 2024, it dropped further by N36.04 billion or 0.06 per cent to close at N55.478 trillion from N55.514 trillion.
According to capital market analysts, investors in the local market continued to take profit-take based on the sentiment, stressing that Nigeria’s capital market is still one of the best performing Exchanges in Africa and World at large.
However, investors’ returns between January and August 2024 stood at N14.56trillion, while average returns on investment stood at 29.16 per cent Year-till-Date growth.
The equities market had gained N15.68 trillion in the first half of (H1) 2024 as investors continued to invest in blue-chip companies.
Capital market analysts stated that the stock market performance eight months of 2024 is on the backdrop of mixed corporate earnings by listed companies, FG’s reforms in the foreign exchange market, among other factors.
Responding to market performance in eight months of 2024, the Vice President, Highcap Securities Limited, Mr. David Adnori stated that investors are trading based on sentiment.
He stated that the emergence of President Bola Tinubu further energised the stock market since market participants have hope in his ability to rejig the economy and implement economy-friendly policies.
Adnori, however, was optimistic that the stock may maintained its positive momentum in H2 2024, on the backdrop of banking sector recapitalisation and expected H1 2024 corporate earnings by most especially the banks listed on the Exchange.
Amid hike in Monetary Policy Rate to 26.75 per cent, capital market experts stated that its impact has created sentiment trading among investors who see fixed-income market as alternative investment opportunity to hedge against double-digit inflation.
Responding also, an Investment Banker & Stockbroker, Mr. Tajudeen Olayinka stated that the N14.56 trillion market capitalisation gain in eight months of 2024 tells us the presence of huge liquid funds in the hands of institutional investors who currently dominate activities in the stock market.
“It also holds the fact that the future is brighter for some of the listed companies, hence, investors are positioning their portfolios for that brighter future. This is also the reason the market remains resilient in spite of a high interest rate regime,” he said.
On the stock market projection for H2 2024, he said, “the second half of the year may be a bit challenging for a rapid price movement, given a catalogue of offers from banks raising fresh capital to meet the new capital requirements for banks.
“It is going to be more of a balanced market, with investors exercising their rights to additional shares and/or taking new shares to maintain a balance. H2 2024 will be an interesting one for the market.”
