Stock Market Decline by N2.27trn in 3 Weeks amid Loss in Airtel Africa

Kayode Tokede

The stock market of the Nigerian Exchange Limited (NGX) has depreciated by N2.27trillion in market capitalisation to N24.182trillion in the first three weeks of October 2022, following investors’ profit-taking in Airtel Africa Plc.

The market capitalisation of the Exchange had opened October trading at N26.450 trillion.

Consequently, the NGX All-Share Index dropped by 9.4 per cent in its Month-till-Date (MtD) performance to 44,396.73 basis points from 49,024.16 basis points the stock market opened for trading in October.

The market performance in its Year-till-Date (YtD) has slowed down to 3.93 per cent.

Key contributing factor to the decline in the stock market is the dwindling performance in Airtel Africa’s stock.

The stock price of Airtel Africa depreciated by N2.58trillion in market capitalisation when its stock price closed last Friday at N1,312.20 per share from N2,000 it opened for trading activities in the month under review.

The stock market sentiment for the telecom firm has remained very low amid investors buy-interests and sell-offs, as bears dominated proceedings during the period under review following the build-up to the 2023 general election, interest rate hike, and rising inflation.

Speaking with THISDAY, the Chief Executive Officer, Wyoming Capital and Partners, Mr. Tajudeen Olayinka attributed the decline in market performance so far in October 2022 to economic headwinds and Airtel Africa’s price correction.

According to him, “Economic headwinds and Airtel Africa Plc’ price correction are both responsible for the loss we have seen so far in October.

“We are actually in a period of prolonged repricing of securities across markets and instruments, due to a multiplicity of factors. We expect recovery to begin to take place once the economy begins to look more prosperous or stable.

“For those who may wish to invest on a long-term basis, the future starts today. For those who may wish to speculate for short-term benefits, they’ll need to exercise caution, as the downside risk is not completely out yet. On a balance of probability, however, prices appear good and reasonable for long-term horizon.”

The executive vice chairman of Highcap Securities Limited, Mr. David Adonri also attributed the decline in stock market to investors’ profit-taking in Airtel Africa which is currently adjusting to the bearish reality of the capital market.

According to him, “right from the penultimate year to the election, the socio-political atmosphere becomes charged. Politicians resort to violent rhetoric and divisive tactics, which deepens the country’s socio-political fault lines, to establish a competitive edge.

“During this period, the economy becomes overloaded with money arising from excessive election spending, which spikes inflation. 

He added that, “Historical antecedents indicate that on average, both equities and bonds show positive or negative performance in the penultimate year and immediately after the election.

“While the drama of general elections can make your imagination run wild, what you need to watch out for is how the unfolding scenario will affect the economy, the capital market, and your portfolio.”