Investors have been withdrawing from the stock market, particularly in the banking sector, following the recent announcement of proposed recapitalization by the Central Bank of Nigeria (CBN).
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This risk-averse sentiment led to a loss of N633 billion in market capitalization as investors opted to take profits from bank stocks.
Consequently, the market capitalization of listed equities dropped to N57.87 trillion by the end of the holiday-shortened week, down from N58.498 trillion the previous week, representing a 1.1 per cent decrease.
The benchmark All Share Index (ASI) of the Nigerian Exchange Limited (NGX) also declined by 1.1 per cent to 102,314.56 basis points from 103,437.67 basis points in the previous week, driven largely by losses in shares of Guaranty Trust Company (GTCo) Plc (-13.75%), FBN Holdings Plc (-11.15%), and Zenith Bank Plc (-5.88%).
Month-to-Date (MtD) and Year-to-Date (YtD) returns slipped to -2.1 per cent and +36.8 per cent, respectively.
Further analysis reveals that trading activity was affected by the shortened week, with total trading volume and value weakening by 69.2 per cent Week-on-Week (w/w) and 50.5 per cent w/w, amounting to 734.04 million units and N31.58 billion, respectively.
Sectoral performance was predominantly negative, reflecting the prevailing market sentiment.
Notably, all major sectoral indices experienced declines, with the banking sector leading at 7.2 per cent depreciation, followed by the insurance sector at 2.4 per cent, consumer goods sector (-1.3%), oil and gas sector (-0.3%), and the industrial goods sector, which fell by 0.2 per cent.
In their outlook for the week, analysts at Cordros Capital projected continued negative market sentiment, anticipating investors to react unfavorably to potential dilution arising from the CBN’s recapitalization initiative. They also expect medium-term investor sentiments to be influenced by macroeconomic developments and corporate actions.
