By Chukwuma Umeorah
Tight monetary conditions and weakening investor appetite triggered renewed pressure on Nigerian equities last week, as selloffs in major stocks dragged the market lower despite selective gains in banking counters.
The benchmark NGX All-Share Index (ASI) declined by 0.25 per cent week-on-week to close at 249,712.37 points, while market capitalisation fell by approximately N366bn to N160.08tn.
Analysts said the cautious sentiment reflected continued investor concerns over elevated interest rates and the attractiveness of fixed-income instruments following the decision of the Central Bank of Nigeria Monetary Policy Committee to retain the Monetary Policy Rate at 26.50 per cent.
Cowry Asset Management stated that “elevated fixed-income yields and macroeconomic uncertainties may limit broad-based gains, though selective buying could persist in fundamentally strong stocks, particularly in the banking and oil & gas sectors.”
The report added that equities trading was likely to remain “stock-specific with continued short-term volatility” as investors reassess earnings resilience under a high interest-rate environment.
Market activity also weakened significantly during the week. Total turnover declined to 3.875 billion shares valued at N161.76bn in 334,745 deals, compared with 7.772 billion shares worth N374.04bn traded in the previous week. Trading volume, value and number of deals fell by 48.57 per cent, 55.07 per cent and 15.89 per cent respectively, underscoring weaker liquidity and reduced participation across the market.
Despite the broader decline, the banking sector recorded modest gains, advancing 1.11 per cent on renewed buying interest in stocks such as Stanbic IBTC Holdings Plc, Zenith Bank Plc and Fidelity Bank Plc outperforming most sectoral indices.
Analysts attributed the banking sector’s resilience partly to continued investor positioning in fundamentally strong financial stocks with relatively attractive earnings outlooks and dividend expectations.
In contrast, the insurance sector posted the steepest decline, falling 1.77 per cent amid sell pressure in stocks including AXA Mansard Insurance Plc and Sovereign Trust Insurance Plc. The industrial goods index also declined by 1.24 per cent as investors reduced exposure to selected manufacturing and construction-related counters.
Market breadth weakened further, with 55 decliners against 38 gainers during the week, compared with 24 losers and 74 gainers recorded in the preceding week.
Among the major gainers were Associated Bus Company Plc, which advanced 44.82 per cent to close at N9.08 per share, followed by Academy Press Plc, which gained 29.79 per cent to settle at N9.15, and University Press Plc, which rose 28 per cent to close at N6.40 per share. Other notable gainers included International Energy Insurance Plc, Learn Africa Plc and Oando Plc.
On the losers’ chart, Sovereign Trust Insurance Plc shed 22.45 per cent to close at N2.28 per share, while Trans-Nationwide Express Plc declined by 18.98 per cent to N5.72. CAP Plc also fell 14.85 per cent to close at N199 per share.
The Financial Services industry remained the most active segment of the market, accounting for 62.19 per cent of total traded volume and 43.10 per cent of traded value during the week.
Analysts said investor appetite for equities could remain constrained in the near term as Treasury bill and bond yields continue to offer relatively attractive returns under the current monetary environment.
Cowry noted that investors were likely to continue favouring “short-tenored fixed income instruments over duration-sensitive assets,” while equities investors may maintain defensive positioning and selective exposure to sectors considered resilient under tighter monetary conditions.
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