The Nigerian stock market recorded the biggest weekly loss in nearly three years as the Nigerian Exchange Limited, NGX dropped by a significant 3.4% to close at 47351.43 points from 49024.16 points a penultimate week.
The declines in three of the four trading sessions last week culminated in the loss for the ASI, the most since the week ended April 3rd, 2020.
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Analysis shows that the major drags on the index were selloffs in telecom heavyweights Airtel Africa which lost10.00% Week-on-Week, w-o-w, and MTN Nigeria 0.40% as well as steep declines in Okomu Oil 9.98% and Presco 9.99%.
In addition, the Tier 1 banks Zenith Bank dropped by 2.25%, GTCO by 4.23%, First Bank Nigeria Holding, FBNH by 2.94% Stanbic IBTC by 6.00%, Access Corporation by 5.59% and UBA by 3.57% all faced an extended rout, most likely the continued fallout from the outcome of previous week’s monetary policy meeting.
Consequently, the ASI’s Year-to-Date (YtD) return fell to 10.85%, while the market capitalisation slipped by N660 billion W/W to close at N25.79 trillion.
Reacting to market development, analysts at Afrinvest Research said: “We anticipate extended bearish momentum as investors continue to rotate into high-yielding fixed-income assets.”
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Also reacting analysts at Cordros Capital stated: “We expect the weak sentiments that dominated the local bourse last week to persist in the week ahead as investors continue to scale down exposure to equities amidst expectations of a continued uptick in Fixed Income, F.I. yields.
Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”
Reacting on the market outlook, analysts at InvestData Consulting stated: “We expect the losing momentum to slow down on bargain hunters taking advantage of low prices reposition in the market ahead third quarter, Q3’22 corporate earnings.
This is just as banking stocks are gaining attention, despite profit taking that makes the sector more attractive for income investors, while portfolio rebalancing continues on bargain hunting amid the worsening sovereign risks.”
