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By Chukwuma Umeorah
The Nigerian equities market concluded the final week of November on a cautious note, with the NGX All-Share Index (ASI) retreating 0.33% to 97,506.87 points.
Despite a surge in trading activity, investor sentiment remained subdued, leading to a slight decline in market capitalization. While the year-to-date (YTD) return of the ASI stands at a healthy 30.40%, the recent market dip underscores the prevailing uncertainty.
The downturn reflected a blend of profit-taking, sector rotation, and macroeconomic concerns stemming from Nigeria’s economic narrative.
Investor caution was further influenced by newly released Q3 GDP data, showing a year-on-year growth of 3.46 per cent, largely driven by the services and agriculture sectors, which sustained the momentum in the non-oil segment of the economy. Further analysis showed that the oil sector recorded modest gains as output improved slightly.
However, the Monetary Policy Committee’s (MPC) decision to increase the Monetary Policy Rate (MPR) by 25 basis points to combat October’s 33.88 per cent inflation added to market uncertainty.
Despite the cautious outlook, trading activity on the local bourse for the review period surged significantly. Weekly equity turnover reached 3.19 billion shares worth N54.85 billion in 45,112 deals, reflecting a 63.6 per cent and 52.9 per cent increase in volume and value, respectively, compared to the prior week. However, the number of deals declined by 7.09 per cent, suggesting a more selective trading environment.
The Financial Services sector led trading activity, contributing 47.25 per cent to the total volume with 1.509 billion shares valued at N26.90 billion which were traded in 20,357 deals. The Construction and Real Estate sector followed, with 839.95 million shares worth N4.81 billion, while the Oil and Gas sector recorded a total turnover of 256.45 million shares valued at N13.31 billion.
Sectoral performance was mixed. The NGX Insurance Index led gainers with a 1.23 per cent increase, supported by interest in SUNU Assurance and Sovereign Insurance. The NGX Industrial Goods Index followed with a 0.62 per cent rise, driven by gains in Lafarge Africa Plc and UPDC Real Estate Investment Trust. On the flip side, the NGX Oil & Gas Index fell by 1.93 per cent, while the NGX Consumer Goods and Banking Indices declined by 0.38 per cent and 0.28 per cent, respectively, due to sell-offs in SEPLAT, Nigerian Breweries, GTCO, and others.
Notable gainers for the week included SUNU Assurance, Haldane McCall and and Sovereign Insurance gaining 23, 22 and 16 per cent respectively, while Austin Laz led the decliners with a 26 per cent drop, followed by Lasaco Assurance and Eterna Plc shedding 17 per cent and 16 per cent respectively.
Meanwhile, the bond market saw heightened activity, with 189,346 units worth N187.05 million traded in 28 deals, compared to 149,349 units valued at N152.44 million the previous week. The FGSUK2033S6 bond dominated, trading 149,650 units worth N155.73 million across 14 deals. Exchange-Traded Products (ETPs), however, witnessed a decline in activity, with 20,749 units worth N5.28 million traded, compared to the prior week’s 36,273 units worth N7.51 million.
Market analysts attributed the robust trading activity to renewed investor interest amid a volatile macroeconomic backdrop. “As the year draws to a close, expectations of a “Santa rally” fuelled by seasonal optimism and increased liquidity linger. However, technical indicators point to a mixed sentiment. “The failed bullish hammer candlestick formation highlights underlying market weakness, while momentum indicators suggest tentative recovery amidst persistent selling pressure,” Cowry Research analysts stated in their weekly note.
Looking ahead, they note that investors are expected to navigate a complex interplay of rising inflation, monetary policy adjustments, and seasonal trends as the market charts its course into December. “This balance will be crucial in shaping trading outcomes in the final stretch of 2024.”
