Sustained profit-taking shaves N2.57trn off stock market cap in Oct

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By Chinwendu ObienyiWith heavy profit-taking occasioned by the weak macroeconomic environment, insecurity, inflation amongst other factors, investors’ on the Nigeria’s stock market lost N2.57 trillion in the month of October 2022.The Nigerian Exchange Limited (NGX) capitalisation had gained over N4.15 trillion in the last nine months amidst inflationary pressure at 20.52 per cent.However, on monthly performance, investors lost over N324 billion in the month of September 2022, due  to sell-off pressure from rising inflation rate, increased Monetary Policy Rate, MPR, market sentiments and other macroeconomic headwinds.According to data obtained from the NGX’s website, the All Share Index (ASI), which measures the entire market return, had opened the trading month of October 2022 at 49,024.16 basis points, but closed the month at 43,858.34 basis points, representing a 10.5 per cent decrease while market capitalization which opened at N26.451 trillion, closed at N23.877 trillion, representing a N2.57 trillion loss for the trading month.Meanwhile, bullish sentiments returned to the market amid bouts of profit-taking activities.Accordingly, the All-Share Index (ASI) advanced by 0.8 per cent week-on-week (w/w) to close at 44,269.18 points, marking the first gain in the month of November. This was as bargain hunting in Dangote Cement (+8.8 per cent) and BUA Cement (+2.9 per cent) spurred the positive out turn.In summary, the market’s Month-to-Date (MTD) and Year-to-Date (YTD) returns settled at +1.0 and +3.6 per cent, respectively. Sectoral performance was largely bearish following losses in the Oil and Gas (-5.4 per cent), Consumer Goods (-2.3 per cent), Banking (-1.9 per cent), and Insurance (-1.3 per cent) indices. On the flip side, the Industrial Goods (+5.4 per cent) index was the sole gainer of the week.A total turnover of 1.410 billion shares worth N15.510 billion in 19,025 deals was traded last week by investors, in contrast to a total of 598.817 million shares valued at N14.234 billion that exchanged hands in the previous week in 15,859 deals.The Financial Services Industry (measured by volume) led the activity chart with 804.570 million shares valued at N6.300 billion traded in 9,922 deals; thus contributing 57.04 and 40.62 per cent to the total equity turnover volume and value respectively.The Agriculture Industry followed with 357.623 million shares worth N287.992 million in 560 deals while the Conglomerates Industry recorded a turnover of 68.309 million shares worth N97.051 million in 530 deals.Trading in the top three equities namely Access Holdings Plc, FTN Cocoa Processors Plc and Fidelity Bank Plc. (measured by volume) accounted for 800.622 million shares worth N3.373 billion in 2,051 deals, contributing 56.76 and 21.75 per cent to the total equity turnover volume and value respectively.Commenting on the performance of the market, Equity Trader, Planet Capital Limited, Paul Uzum, noted that the month of October was a bearish month for the market as unfavourable news like Naira fall, inflation, interest rates hike hit the market resulting in negative sentiments.“We attribute this to the unpleasant macroeconomic news and you know the market is information driven. This unpleasant news include; the continued devaluation of the Naira at the parallel market and so there is a widening gap between the official and black market rates. This sent a lot of panic to investors holding Naira assets.For the month of November 2022, we have seen earnings from companies quoted on the NGX within the last one week and investors are looking at these results and taking positions for dividend payment and so we expect to see some form of cautious trading this month”, Uzum said.For their part, analysts at Cordros Research, said, “Looking ahead, we expect investors to rebalance their portfolios based on an assessment of corporate earnings released for Q3-22. However, the increased FI yields may continue to constrain buying activities.Consequently, we expect market performance to remain mixed in the week ahead as investors rotate their portfolios towards stocks with attractive dividend yields amid intermittent profit-taking activities. Overall, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings”.



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