Nigerian Stock Market Plunges, Losing N673 Billion Amid Persistent Bearish Sentiment

The Nigerian stock market experienced a significant downturn, with the All-Share Index declining by 1.20% and a staggering loss of N673.16 billion in market capitalization. The bearish sentiment was driven by sell-offs in key stocks, reflecting the current market dynamics and economic challenges.

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Nasiru Eneji Abdulrasheed
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Nigerian Stock Market Plunges, Losing N673 Billion Amid Persistent Bearish Sentiment

Nigerian Stock Market Plunges, Losing N673 Billion Amid Persistent Bearish Sentiment

The Nigerian stock market experienced a significant downturn on Wednesday, with the All-Share Index (ASI) declining by 1.20% to close at 98,121.30 basis points. This bearish sentiment led to a staggering loss of N673.16 billion in market capitalization, which now stands at N55.494 trillion. The year-to-date return has further reduced to 31.22%.

The market's decline was primarily driven by sell-offs in key stocks such as MTN Nigeria, Transcorp Hotels, Oando Plc, and FBN Holdings. These stocks recorded share price losses ranging from 9.82% to 10%. Despite the overall negative sentiment, the market recorded more advancing stocks (22) than declining stocks (19).

Trading activity levels saw gains in total deals and value, increasing by 7.96% and 22.10%, respectively. However, traded volume witnessed a notable decline of 31.10% to 395.75 million units. Guaranty Trust Holding Company (GTCO) led the activity, followed by Zenith Bank and United Bank for Africa.

Why this matters: The persistent bearish sentiment in the Nigerian stock market reflects the current market dynamics and changes in fundamentals, such as the high-interest rate environment and improved yields in alternative investment windows. This significant loss in market capitalization highlights the economic, business, and financial challenges faced by investors and the broader economy.

Sectoral performance exhibited a mixed trend, with the Banking and Insurance sectors posting losses due to sell-offs in key stocks, while the Consumer and Industrial Goods sectors recorded marginal gains. In the money market, the Overnight NIBOR rate decreased, indicating an easing of liquidity. The Naira also depreciated by 0.64% against the dollar.

The bearish run in the Nigerian stock market has persisted since the start of April 2024, with the ASI declining by 6.16% and the market capitalization falling by N3.63 trillion. "The massive loss has been attributed to the bearish performance of banking stocks, particularly after the announcement of the recapitalization exercise," according to market analysts.

As the market continues to navigate the challenges posed by high yields on Nigerian Treasury bills and the underperformance of blue-chip stocks, investors remain cautious. The Nigerian Exchange Limited (NGX) listed VFD Group Plc's Rights Issue on its Daily Official List, representing a crucial step in the company's growth trajectory amidst the sustained profit-taking momentum bearish sentiment.

Key Takeaways

  • Nigerian stock market experienced a 1.20% decline, losing N673.16 billion in market cap.
  • Sell-offs in key stocks like MTN, Transcorp, Oando, and FBN Holdings drove the bearish sentiment.
  • Trading activity saw gains in deals and value, but volume declined by 31.10%.
  • Bearish run attributed to high-interest rates and improved yields in alternative investments.
  • NGX listed VFD Group's Rights Issue amid sustained profit-taking and bearish sentiment.