Nigerian Equities Market: Investors Lose N2.57trn Amid Rising Global Risks in October

Kayode Tokede

Investors in stock market of the Nigerian Exchange Limited (NGX) lost an average N2.57 trillion in the October 2022 as escalated global energy and commodity crises triggered massive portfolio realignments.

The market capitalisation opened trading at N26.451 trillion, dropping N2.57trillion or 9.7per cent to close at N23.878 trillion yesterday, while the NGX All-Share Index depreciated by 10.6 per cent to close at 43,839.08 basis points from 49,024.16 basis points it closed for trading in September 2022. 

The stock market in its year-to-date return, however, remained positive with average year-to-date return of 2.6 per cent, equivalent to net capital gain of about N1.58 trillion for the 10-month period.

The October stock market performance underlined sustained decline in recent months with investors  losing an average of 1.63 per cent or N430 billion in September. The market had lost about N28.3 billion in August and suffered its highest loss within the quarter at the onset with a N772 billion loss in July.

Capital analysts attributed the stock market performance to the worsening domestic and global economic risks characterised by rising inflation and higher interest rates.

The vice president, Highcap Securities, Mr. David Adonri had explained that “Losses suffered by the stock market is based on the movement of financial assets from stock, which depend on the micro-economy conditions and monetary policies.

“In 2020, CBN embarks on expansionary monetary policies to expand money supplies, and the stock market appreciates massively.

“But now that we have inflation and when CBN has decided to hike monetary policies, we also see the impact on equities, causing financial assets to move from equities. That was why the market lost in the last month.”

The CEO Wyoming Capital and Partners, Mr. Tajudeen Olayinka attributed the decline in the stock market to prolonged repricing of securities across markets and instruments by investors.

He said, “Investors reacted sharply to three quick succession in MPR hike, beginning with 13per cent in May, 14per cent in July, and 15.5per cent in September.

“September 2022 was quite spectacular because investors exercised extreme caution by holding back further investment in equity, in reaction to aggressive rise in inflation (20.52 per cent) in the month of August, 2022.

“The headwinds are just too many for securities market at this time, and more and more investors are becoming increasingly fearful, especially with respect to rising inflation. But given the fact of low equity prices, it won’t take a long time before the market gets back on the path of gradual recovery. We should look forward to a long-term bullish market.”