NIGERIA’s stock market lost approximately N1.794 trillion in value over the past four weeks. This drop was mainly due to worries about the global economy, decisions made by Nigeria’s central bank (CBN), and how investors felt about Nigeria’s economic future.
This is the first time the Nigerian stock market has seen a losing streak this long since the beginning of the year.
Throughout these weeks, bank shares were particularly affected, causing the share prices of companies like FCMB Group, First HoldCo, and Access Holdings to fall.
The drop in the value of bank shares was largely because investors were adjusting their portfolios. They were trying to understand how the falling prices of everyday goods (Consumer Price Index or CPI) and the continuing good performance of the money market and fixed-income investments would affect things.
In the oil and gas sector, the decline was mainly due to investors selling off shares in major oil-producing companies. This caution came as a result of ongoing political and economic issues in Nigeria’s oil-rich areas.
Analysis by The ICIR shows that the total value of shares listed on the Nigerian Exchange Limited (NGX) was N65.82 trillion when trading closed on Friday, March 21.
Compared to the N67.61 trillion it was at the end of February, when the market started its downward trend, the total value of the stock market has fallen by 2.65 per cent.
On the positive side, the consumer goods index slightly appreciated. This was driven by upward price movements in stocks such as Neimeth International Pharmaceuticals, Northern Nigeria Flour Mills, NASCON Allied Industries, and Dangote Sugar, which benefited from renewed investor interest in the company’s stocks.
Analysts believe that the prevailing negative sentiments have exerted pressure on stock prices, stressing that the persistent downturn was primarily driven by investors reacting to evolving global economic conditions.
Despite the CPI report for February putting inflation at ease for a second consecutive month, bearish sentiment persisted in the stock market, leading to an extended sell-off across various sectors of the market.
With negative sentiment dominating market activity during the four weeks under review, the All-Share Index (ASI) equally declined.
The movement saw the ASI dropping from 108,497.40 basis points in the last week of February to 104,962.96 basis points as of March 21.
This points to an overall decline in investors’ confidence, reinforcing a cautious approach among market participants, analysts maintained.
According to analysts at Cowry Asset Management, the prevailing market conditions indicate that the market is currently in an oversold state, presenting a potential buying opportunity for discerning investors.
They stressed that the ongoing pullback has created an environment where dividend-paying stocks are becoming increasingly attractive, as their yields are likely to improve in response to the recent price corrections.
“As the market enters the final trading week of March and concludes the first quarter of 2025, many investors may begin repositioning their portfolios to take advantage of dividend season, which typically offers prospects for capital appreciation and income generation.
“Looking ahead, the equities market is expected to experience continued corrections and portfolio adjustments, as investors digest corporate earnings reports and assess the broader impact of macroeconomic data releases.”
They believe that the direction of the market in the near term will likely be influenced by the performance of global financial markets, monetary policy decisions by the Central Bank of Nigeria (CBN), and investor sentiment surrounding Nigeria’s economic outlook.
“Given these dynamics, we continue to advise investors to focus on stocks with strong fundamentals,” the Cowry analysts advised.