Nigerian equities lost about N772 billion in price depreciation in July as market-wide selloff led to panicky portfolio realignments and cut-down in demand-driven transactions.
Benchmark indices at the stock market at the weekend indicated average decline of 2.79 per cent last month, equivalent to capital depreciation of N772 billion.
The decline in July moderated the positive average year-to-date return for Nigerian equities to 17.92 per cent. However, investors in many sectors are with negative seven-month returns, including investors in key sectors of banking, insurance and consumer goods sectors.
The momentum of activities also slowed down considerably during the month. Average volume and value traded in July stood at 172 million shares worth N2.6 billion compared with 276.9 million shares valued at N3.7 billion recorded in June.
The All Share Index (ASI)- the value-based common index that tracks all share prices at the Nigerian Exchange (NGX) closed weekend at 50,370.25 points as against the month’s opening index of 51,817.59 points. Aggregate market value of all quoted equities also declined from the month’s opening value of N27.935 trillion to close weekend at N27.163 trillion.
Pricing trend analysis showed that investors had no safe haven during the month with the exception of the bubbling oil and gas sector, which posted a positive monthly return of 2.01 per cent in July. The NGX 30 Index-which tracks the 30 largest stocks at the stock market; declined by 3.57 per cent during the month. The influential and most active banking sector posted negative return of –4.92 per cent. The NGX Insurance Index- the most populous sector, depreciated by 6.33 per cent. The NGX Consumer Goods Index dropped by 8.13 per cent while the NGX Industrial Goods Index declined by 4.18 per cent during the month. Most investors’ preferences were also affected. The NGX Lotus Islamic Index-which tracks ethical stocks in compliance with Islamic rules, dropped by 3.33 per cent while the NGX Pension Index-which tracks stocks specially screened for pension funds investments, indicated average decline of 5.54 per cent.
A seven-month sectoral analysis also showed several investors might be in the red despite the positive overall return. The positive overall return was driven by 61.24 per cent return in the oil and gas sector. The NGX 30 Index rode on the back of oil gains to close with seven-month return of 5.69 per cent. The NGX Industrial Goods Index posted modest return of 2.69 per cent for the seven-month period. The NGX Lotus Islamic Index and NGX Pension Index also closed positive with average returns of 6.06 per cent and 4.43 per cent. Other sectors closed the seven-month period negative. The NGX Banking Index posted negative return of 6.86 per cent. The NGX Insurance Index declined by 15.68 per cent while the NGX Consumer Goods Index depreciated 2.72 per cent for the seven-month period.
Trading also rounded off the last week of the month on extremely bearish note. There were 11 gainers against 53 losers last week in contrast with 19 gainers and 36 losers recorded in the previous week. P Z Cussons Nigeria led the losers with a drop of 18.27 per cent to close at N8.50 per share. Wema Bank followed with a drop of 17.54 per cent to close at N3.29 while Ikeja Hotel declined by 17.09 per cent to close at 97 kobo per share. On the positive side, Nigerian Aviation Handling Company led the gainers with a gain of 9.09 per cent to close at N6 per share. Union Bank of Nigeria rose by 7.84 per cent to close at N5.50 per share while UPDC Real Estate Investment Trust appreciated by 4.41 per cent to N3.55 per share.
Total turnover stood at 1.546 billion shares worth N16.289 billion in 23,873 deals last week as against 917.190 million shares valued at N14.803 billion traded in 19,513 deals two weeks ago. The financial services sector led the activity chart with 1.192 billion shares valued at N5.978 billion in 11,996 deals, thus contributing 77.11 per cent and 36.70 per cent to the total equity turnover volume and value. The conglomerates industry followed with 102.969 million shares worth N236.618 million in 858 deals while the third place was occupied by the consumer goods industry, with a turnover of 102.937 million shares worth N2.616 billion in 3,167 deals.
The three most active stocks for the week were International Energy Insurance, Transcorp Hotels and Zenith Bank, which altogether accounted for 798.900 million shares worth N2.602 billion in 3,110 deals, contributing 51.69 per cent and 15.98 per cent to the total equity turnover volume and value respectively.
“In the interim, we believe the full swing of the first half 2022 earnings season will dictate market sentiments and possibly drive positive performance as investors hunt for bargains in fundamentally sound stocks with a consistent history of interim dividend payments.
“Notwithstanding, we envisage intense selling pressurews on stocks of companies that grossly underperformed in first half 2022. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings” analysts at Cordros Securities stated at the weekend.