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The Nigerian equities market extended its decline last week, with market capitalisation falling by about N1.9 trillion as investors continued to sell selected stocks amid broad-based weakness across major sectors.
The Nigerian Exchange (NGX) All-Share Index fell by 1.20 per cent during the week to close at 242,619.20 points, while market capitalisation declined by 1.19 per cent to N156.624 trillion. The decline moderated the market’s year-to-date return to 55.91 per cent.
The decline came despite a sharp increase in trading activity, with investors exchanging 12.153 billion shares valued at N176.058 billion in 224,146 deals, compared with 5.359 billion shares worth N139.053 billion in 261,869 deals in the preceding week. This represented a 126.76 per cent increase in weekly volume and a 26.67 per cent rise in transaction value, even as the number of deals fell by 14.40 per cent.
The combination of heavier trading and a declining index suggested that investors remained active in repositioning their portfolios, with selling pressure concentrated in several counters.
According to Cowry Asset Management, “the market’s decline reflected continued profit-taking following its strong performance earlier in the year, with investors becoming more cautious over elevated valuations and near-term market catalysts.”
Cowry added that the breadth of the sell-off remained weak, with 59 stocks recording losses against 26 gainers, indicating that the negative sentiment was not limited to a few large-cap stocks. The weekly performance report also showed that 62 equities closed unchanged during the week, compared with 58 in the previous week. The number of declining stocks, however, fell from 63 in the preceding week to 59, while the number of gainers remained unchanged at 26.
The weakness cut across the major sectors of the equities market. The NGX Insurance Index recorded the largest decline among the major sectoral indices, falling 2.72 per cent during the week. The Banking Index declined by 1.48 per cent, while the Industrial Goods Index fell 1.22 per cent.
The Consumer Goods Index also recorded a sharp 6.72 per cent decline, while the Oil and Gas Index fell 0.74 per cent. The NGX Premium Index declined 2.15 per cent, while the NGX 30 Index lost 1.21 per cent. Cowry said the Insurance sector’s decline was driven by sell-offs in Cornerstone Insurance, Mansard Insurance and WAPIC, which outweighed gains recorded by International Energy Insurance and Sovereign Trust Insurance.
In the Consumer Goods sector, losses in Unilever Nigeria, Dangote Sugar Refinery and BUA Foods weighed on the index, while the Banking sector was affected by declines in First HoldCo, Ecobank Transnational Incorporated and Zenith Bank.
At the individual stock level, AVA Capital Plc recorded the largest weekly decline, falling 34.55 per cent from N11 to N7.20 per share. Unilever Nigeria Plc followed with an 18.94 per cent decline, while Zichis Agro Allied Industries Plc fell 15.08 per cent. Thomas Wyatt Nigeria Plc, Dangote Sugar Refinery Plc, NPF Microfinance Bank Plc, Austin Laz & Company Plc, Cornerstone Insurance Plc, BUA Foods Plc and John Holt Plc also ranked among the biggest losers.
The losses were partly offset by gains in selected equities. Trans-Nationwide Express Plc led the gainers, rising 32.09 per cent from N2.15 to N2.84 per share. International Energy Insurance Plc gained 31.68 per cent, Sovereign Trust Insurance Plc rose 13.77 per cent, while Chams Holding Company Plc and CWG Plc gained 12.25 per cent and 9.74 per cent respectively. Airtel Africa Plc, Guinea Insurance Plc, VFD Group Plc, Nigerian Aviation Handling Company Plc and Cadbury Nigeria Plc also recorded gains during the week.
Despite the decline in the broader market, trading activity was heavily concentrated in financial services stocks. The Financial Services Industry accounted for 11.212 billion shares valued at N88.991 billion in 102,246 deals, representing 92.25 per cent of total equity turnover by volume and 50.55 per cent by value.
The ICT Industry followed with 246.127 million shares worth N51.605 billion, while the Services Industry recorded 198.195 million shares valued at N1.995 billion.
Three equities namely Fortis Global Insurance Plc, Cornerstone Insurance Plc and Consolidated Hallmark Holdings Plc accounted for 9.488 billion shares worth N36.219 billion in 1,781 deals.
Their combined volume represented 78.07 per cent of total equity turnover for the week, although their combined value accounted for 20.57 per cent of total turnover value.
The sharp rise in volume amid the decline in the All-Share Index points to increased activity in selected stocks rather than a broad withdrawal of investors from the equities market. Cowry noted that the fall in the number of deals alongside the substantial increase in volume indicated that trading activity had become concentrated in larger transactions, potentially reflecting institutional repositioning and portfolio adjustments.
The research firm also said the market was likely to remain cautious and selective in the near term, with corporate earnings, liquidity conditions, macroeconomic developments and stock valuations expected to influence market direction. “The combination of a 55.91 per cent year-to-date return, weak market breadth and declines across the major sectors pointed to a market undergoing consolidation rather than a uniform deterioration in fundamentals.”
The week’s performance therefore leaves the equities market with a substantial year-to-date gain despite the recent pullback, while the increase in turnover suggests that investors continue to trade actively even as they reassess stock valuations and lock in gains. The NGX data also showed that the market’s decline was not accompanied by a collapse in liquidity. Rather, the heavier turnover indicates that significant transactions continued to take place in selected equities as the market adjusted to the selling pressure.
