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By Chinwendu Obienyi
The Nigerian Exchange Limited (NGX) has witnessed a sharp decline in market value, with N234 billion wiped off its capitalisation in just three days. The downturn follows a controversial windfall tax imposed by the Federal Government, which has unsettled investors, particularly those in the banking sector.
On Thursday, investor sentiment towards banking stocks plummeted, resulting in a N118 billion decrease in the NGX market capitalisation. This followed earlier declines of N47 billion and N69 billion on Tuesday and Wednesday, respectively. As a result, the NGX closed the day with a total market capitalisation of N56.71 trillion and the All Share Index (ASI) fell by 0.21 per cent, ending at 100,156.96 points.
The domestic bourse has been in a downward trend, exacerbated by recent interest rate hikes and heavy sell-offs in major Tier-1 banking stocks including AccessCorp, GTCO, UBA, FBN Holdings, and Zenith Bank. The ASI is now on track for a weekly loss.
Despite the overall market downturn, trading volumes surged. The volume of stocks traded increased by 169 per cent to 1.34 billion units, while the value of trades rose by 12.43 per cent to N9.67 billion, spread across 8,198 transactions.
Sector performance showed declines across several indices: Banking (-1.6 per cent), Insurance (-0.8 per cent), and Consumer Goods (-0.3 per cent), while the Insurance and Oil and Gas indices remained unchanged.
Market operators have attributed the negative sentiment to the new windfall tax, which they believe could result in further losses exceeding N3 trillion due to ongoing recapitalisation efforts. A stockbroker, who preferred to remain anonymous, commented, “The market has seen positive gains recently, but current government policies and Central Bank actions are driving a negative reaction. If these issues are not addressed, the capital market might face significant challenges.”
In terms of individual stock performance, 24 stocks declined compared to 12 that gained. OMATEK (-10.0 per cent) and CUTIX (-9.5 per cent) were among the biggest losers, while CUSTODIAN (+8.5 per cent) and LIVESTOCK (+3.9 per cent) saw the most notable gains.
Meanwhile, the Naira experienced a decline against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) Window. After a previous appreciation of 6.05 per cent, the Naira fell by 1.08 per cent to close at N1,603.80 per dollar.
