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By Chinwendu Obienyi
Heavy profit-taking as well as sell pressure dominated proceedings on the floor of the Nigerian Exchange Limited (NGX) which led to a mere gain of N35 billion from investors at the end of the trading month of August.
Daily Sun analysis of the market revealed that the market capitalisation, which measures the value of all stocks, rose by N35 billion from N20.084 trillion recorded in July 2021 to close the month at N20.434 trillion.
In the same vein, the NGX All-Share Index (ASI) increased by 672.53 basis points from an opening value of 38,547.08 points to close at 39,219.61 points. Daily Sun had reported that the market performance in the first seven month of 2021 showed that the stock market, which kicked off the year with a bullish moment from 2020, appreciated by 5.3 per cent in January 2021.
The market subsequently reversed as a result of profit-taking and modest yield on the fixed income market, which created sentiment trading by investors which drove the market’s depreciation of 5.9 per cent in the first half of 2021.
The profit-taking eased as the stock market ended July, which is the beginning of the second half of the year, with a growth of 1.7 per cent. However, cautious trading in the market due to FX issues in the economy, sell pressure drove the meager gain in the month of August.
Market operators linked the performance to bargaining hunting and positioning ahead of corporate results while adding that investors kept exiting the market over foreign exchange scarcity.
Speaking to Daily Sun, the Chief Executive Officer, APT Securities and Funds, Garba Kurfi, noted that although the market closed the month on a positive note, investors’ profit-taking as well as sell pressure dominated the performance of the market.
He said, “The exit of foreign investors from the country has affected the equities market as many of them choose to move out of the country because of difficulties obtaining foreign exchange. Other African Exchanges are doing better than us as they attracted more foreign investors. The profit-taking by investors’ was as a result of an upsurge of prices of stocks in the fourth quarter of 2020 when most of the stocks doubled their prices within three months.”
