Kayode Tokede
The stock market of the Nigerian Exchange Limited (NGX) dropped by N2488 billion in its Week-on-Week (WoW) performance as investors uncertainty loom over the outcome of Central Bank of Nigeria (CBN) this week’s Monetary Policy Committee (MPC) meeting.
The CBN’s MPC meeting is scheduled for Monday and Tuesday this week and the members in first meeting in 2024 voted to raise the Monetary Policy Rate (MPR) by 400 basis points to 22.75 from 18.75 per cent, raise the Cash Reserve Ratio from 32.5 per cent to 45.0 per cent and retain the Liquidity Ratio at 30 per cent.
Capital market analysts stated that trading activities on the Nigerian stock market will be driven by the outcome of MPC meeting of this week, stressing that investors, most especially foreign investors may divest in money market instruments if the members voted to hike MPR.
The domestic stock market however, closed last week on a bearish note as the market capitalisation declined by N248 billion WoW to close at N59.169 trillion, while the NGX All-Share Index (ASI) shed 0.42 per cent WoW to close at 104,647.37 basis points.
Sectoral performance for the week was mostly positive, except for the NGX Consumer Goods index, which recorded a loss of 0.37 per cent week-on-week. Conversely, the NGX Banking, NGX Insurance, NGX Industrial, and NX Oil & Gas sectors experienced gains, driven by upward movements in the prices of key stocks.
However, the market breadth for the week was positive as 50 equities appreciated in price, 32 equities depreciated in price, while 72 equities remained unchanged. Juli led the gainers table by 46.10 per cent to close at N7.86, per share. NEM Insurance followed with a gain of 45.11 per cent to close at N9.65, while International Energy Insurance went up by 22.95 per cent to close to N1.50 per share.
On the other side, Julius Berger Nigeria led the decliners table by 17.15 per cent to close at N60.15, per share. DAAR Communications followed with a loss of 14.10 per cent to close at 67 kobo, while UPDC Real Estate Investment Trust declined by 12.73 per cent to close at N4.80, per share.
Overall, a total turnover of 1.735 billion shares worth N48.755 billion in 45,237 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.773 billion shares valued at N52.867 billion that exchanged hands prior week in 44,713 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.273 billion shares valued at N31.077 billion traded in 23,066 deals; contributing 73.36 per cent and 63.74 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 123.237 million shares worth N1.772 billion in 3,205 deals, while the Consumer Goods Industry traded a turnover of 104.854 million shares worth N5.292 billion in 6,166 deals.
Trading in the top three equities; United Bank for Africa (UBA), FBN Holdings (FBNH) and Access Holdings (measured by volume) accounted for 564.882 million shares worth N16.990 billion in 8,493 deals, contributing 32.56 per cent and 34.85 per cent to the total equity turnover volume and value respectively.
In the just concluded week, the stock market demonstrated a lackluster performance, with market participants focusing on the audited accounts of banks ahead of the impending monetary policy committee meeting.
This led to cautious positioning amidst low traded volumes and a mildly positive market breadth. The market declined despite a strong interest in financial stocks, driven by recent developments regarding the apex bank’s efforts to clear FX backlogs.
This initiative aimed to attract foreign investors and ensure the stability of the local currency, resulting in notable accretion in the Naira.
Looking ahead to the new week, analysts at Cordros Research stated that, “we believe investors will be focused on the outcome of the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the FI market. As a result, we envisage an extension of the cautious trading theme, especially from domestic investors.”
For analysts at Cowry Assets Management Limited, they anticipated “a mixed outing in the equities market following the outcome of the monetary policy committee meeting. Expectations for upward movement in interest rate s may influence market sentiment.
“However, we anticipate continued portfolio rebalancing activities as we approach the end of the first quarter of 2024. Fund managers are likely to engage in window dressing activities ahead of Q1 corporate releases and dividend earning seasons. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”
Afrinvest Limited said: ‘this week, we expect the market performance to be influenced by the outcome of the upcoming MPC meeting.’
