Stock Market Down N1.83tn WoW on MPR Hike, Poor Corporate Earnings

Kayode Tokede 

The Nigerian equities market predominantly exhibited bearish performance last week, dropping by N1.83 trillion in market capitalisation following the Monetary Policy Committee (MPC) hike in Monetary Policy Rate (MPR) to 22.75 per cent and poor 2023 corporate earnings by some listed companies. 

The overall market capitalisation decreased by N1.83 trillion to close at N54.035 trillion from N55.861 trillion it opened the week, while the NGX All-Share Index shedding 3.27 per cent WoW to 98,751.98 basis points from 102,088.30 basis points it opened for trading.

Last week witnessed losses declared by MTN Nigeria Communications Plc, Dangote Sugar Refinery Plc, among other companies with investors’ sentiment trading rocking the local stock market.

The Nigerian stock market is expected to witness return of positive movement this week as investors expect more companies to release their full-year 2023 audited accounts in the coming days.

The prevailing market sentiment was largely influenced by weaker than expected corporate earnings releases and the initiation of the dividend earnings season in the face of the fixed income market’s higher yields outlook, fueled by recent auctions, which contributed to the mildly negative market breadth.

Furthermore, the recent rate hike by the monetary policy committee prompts ongoing portfolio rebalancing among market participants. Also, the local bourse’s recent performance underscores the dynamic interplay of market forces amidst evolving economic conditions.

It reflected in sectoral front performance last week as the NGX Insurance and NGX Industrial Goods indices bore the brunt of the downturn, experiencing losses of 3.40 per cent and 3.87 per cent respectively.

Similarly, the NGX Consumer Goods, NGX Oil & Gas, and NGX Banking sectors witnessed declines of 2.62 per cent, 1.55 per cent, and 0.69 per cent respectively.

The market breadth for the week was negative as 27 equities appreciated in price, 54 equities depreciated in price, while 72 equities remained unchanged. Juli led the gainers table by 60.26 per cent to close at N3.75, per share. PZ Cussons Nigeria followed with a gain of 27.36 per cent to close at N33.75, while Sterling Financial Holdings Company went up by 14.94 per cent to close to N5.00, per share.

On the other side, MTN Nigeria Communications (MTNN) led the decliners table by 18.91 per cent to close at N200.70, per share. SUNU Assurance and Nestle Nigeria followed with a loss of 18.18 per cent each to close at N1.71 and N900.00 respectively, while CWG declined by 11.76 per cent to close at N6.00, per share.

Overall, a total turnover of 1.882 billion shares worth N34.149 billion in 48,464 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.377 billion shares valued at N31.584 billion that exchanged hands prior week in 42,040 deals.

In the new week, Cowry Assets Management Limited said: “we anticipate a gradual return of positive investor sentiment, driven by corporate earnings scorecards and announced corporate actions. However, we think the high interest environment resulting from the recent policy rate hike by the CBN to 22.75 per cent and rising yields in the fixed income market will likely influence investor behaviour.

“Regardless, investors are expected to continue rebalancing their portfolios as they carefully assess Nigeria’s macroeconomic data. Meanwhile, we continue to advise investors on taking positions in stocks with sound fundamentals.”

On market outlook, the chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion added that: “we expect bearish sentiment to continue as players digest outcome of MPC decision and take advantage of the pullbacks in the face of expected audited corporate earnings and ongoing portfolio rebalancing.

“This is amidst the volatility and pullbacks that add more strength to upside potential. As such, investors should take advantage of price correction. Also looking at the trends and events across the globe and domestically.”