Economic lull hits equities as investors lose over N1.74tr in one month
Lingering economic challenges resulting in uncertainty, inflation and insecurity have continued to hit hard on stocks performance as investors lost about N1.74 trillion in April.
The month came with scanty trading sessions owing to public holidays with the bears outperforming the bulls on most of the days, which led to a sustained month-on-month decline of about N1.74 trillion.
Precisely, the market capitalisation, which opened the month of April at N30.24 trillion, depreciated by N1.74 trillion to close at N28.5trillion.
The all-share index (ASI) equally declined by 3.4 per cent from 55.508.61 to 54, 403. 51.
Year-to-date (YTD) return also fell to 2.2 per cent from seven per cent achieved at the close of transactions in March.
Market capitalisation value depreciated, despite impressive earnings and dividend announcements from listed companies.
The seemingly improved performance and buying interest in financial services stocks, consumer and industrial goods of the NSE failed to push the market indices as sell-offs in large company shares dragged the key performance indices down.
Operators said macroeconomic challenges constitute a major disincentive to investment as foreign participation in equities continues to wane.
According to them, aside from the increasing level of insecurity in the country, uncertainties surrounding the political space are impacting negatively the market with all eyes focused on the incoming administration and its economic policies.
Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, said the Nigerian Stock Exchange (NGX) in the first trading month of the second quarter had a mixed performance, thereby extending the previous, month’s negative outing, amid selloffs and profit-taking among large-cap and blue-chip companies.
According to him, this is despite, improved liquidity and better-than-expected Q1 corporate earnings churned out by listed firms during the period.
However, Omordion predicted a brighter outlook for equities this month ahead of the inauguration and assumption of office of the new government.
Analysts at Codros Capital said investors’ sentiments would be influenced by developments in the macroeconomic landscape and the movement of yields in the fixed-income space in the medium term.
“Given the Q1’23 earnings season, we expect decent earnings releases across the board to temper selling activities and support positive sentiments on the bourse.
“Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings,” he said.
On the monthly activity chart, trading expanded as the average volume and value traded rose by 242.2.per cent to 1.1 billion units worth ₦5.2 billion.
TransNational Corporation Plc (667.2 million units), United Bank for Africa Plc (410.6 million units) and Courtville (327.4m units) were the top traded stocks by volume for the month while GTCO (₦7.4 billion), MTNN (₦4.9 billion and UBA (₦3.3 billion) led in value.