Nigeria’s stock market extended its losing streak for a third consecutive week, with investors shedding another ₦1.8 trillion in value.
This is even as trading activity rebounded sharply amid growing caution over upcoming economic events, expectations surrounding the Dangote Refinery listing and the release of second-quarter corporate earnings.
For the trading week ended July 3, the Nigerian Exchange (NGX) All-Share Index (ASI) fell by 1.21 per cent to close at 229,240.34 points, while market capitalisation declined by the same margin to ₦147.103 trillion from about ₦148.905 trillion a week earlier, wiping roughly ₦1.8 trillion off investors’ holdings.
The latest decline means the market has remained under pressure for three straight weeks, with all six major sectoral indices ending lower despite a recovery in trading volumes and transaction value.
Financial analyst and Managing Director of Financial Derivatives Company, Bismarck Rewane, believes the recent weakness should be viewed as a market correction rather than the beginning of a prolonged downturn.
“The first 10 per cent decline is what we call a correction. The second 10 per cent… is what we call a bear market,” he said, adding, “I believe the market is simply undergoing a correction. I do not think it will deteriorate into a bear market.”
Correction Deepens as Investors Hold Back
The week’s performance reflected widespread selling pressure across sectors. Industrial Goods recorded the biggest decline, falling 4.93 per cent, followed by Oil and Gas, which dropped 4.34 per cent. Banking lost 3.72 per cent, Commodity Index fell 2.91 per cent, Insurance declined 2.52 per cent, while Consumer Goods shed 1.60 per cent.
Although 22 stocks advanced during the week, matching the previous week’s figure, losers continued to dominate with 57 declining equities.
Airtel Africa led the gainers with a 21 per cent increase, followed by Regency Assurance, UPDC, DAAR Communications, Sunu Assurances Nigeria, Japaul Gold & Ventures, Chams Holding Company, Coronation Infrastructure Fund, CWG and Cutix.
On the losing side, International Energy Insurance recorded the steepest decline after shedding 18.83 per cent. It was followed by McNichols, University Press, RT Briscoe, UPDC Real Estate Investment Trust, Universal Insurance, Guinea Insurance, NEM Insurance, Honeywell Flour Mill and The Initiates Plc.
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According to Rewane, the selling pressure is not necessarily a reflection of weak company performance.
“We know that first-quarter earnings have been released, and they were good. Whatever is happening now is therefore driven more by speculation than by fundamentals,” he said.
He explained that many investors are deliberately holding back cash in anticipation of the IPO of the announced Dangote Refinery IPO, while pension funds, now cleared to participate, are also positioning themselves for the offer.
“If these funds stop buying shares because they want to keep their powder dry for the Dangote Refinery IPO, demand for existing shares naturally falls.
“At the same time, the supply of shares has increased because banks have completed their recapitalisation exercises. So, you have increased supply and restricted demand, which pushes prices lower,” he said.
Rewane also noted that treasury bills currently offer yields of about 16 per cent compared with an average dividend yield of about 4 per cent for major stocks, making fixed-income securities more attractive to investors.
Higher Trading Activity Amid Cautious Sentiment
Despite falling prices, investors traded more shares during the week, as turnover volume rose by 64.41 per cent to 3.821 billion shares from 2.324 billion shares the previous week, while the value of transactions increased by 14.80 per cent to ₦154.393 billion from ₦134.486 billion.
The Financial Services Industry remained the market’s busiest sector, accounting for 60.99 per cent of total traded volume and 35.37 per cent of total value.
Sterling Financial Holdings Company, Access Holdings Plc and Ikeja Hotel Plc were the three most actively traded stocks, contributing 36.78 per cent of the week’s total equity turnover.
The week also witnessed notable corporate developments. Fortis Global Insurance completed its share reconstruction exercise after the NGX delisted its former 12.91 billion ordinary shares and listed a reconstructed share capital of 3.23 billion shares at ₦3.96 each.
Trading in the company’s shares has now resumed after a suspension that began on June 17.
Abbey Mortgage Bank also officially became Abbey Bank Plc, with its trading symbol changing from ABBEYBDS to ABBEYBANK, while Deap Capital Management & Trust Plc changed its name to Critical Minerals Financing Corp Plc and adopted the trading symbol CMFC.
Looking ahead, Rewane expects investors to remain cautious through July as they await key events, including the OPEC meeting, Nigeria’s inflation figures, the Central Bank’s Monetary Policy Committee meeting and second-quarter corporate earnings.
He, however, urged investors not to panic, saying, “My advice is that nobody should panic. Analysts should avoid sending unnecessary negative signals. They should remain neutral rather than creating an atmosphere of fear,” he said.
Rewane added that he does not expect the current weakness to persist beyond July, saying strong half-year earnings and improving valuations should gradually restore confidence in the market.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X