Onome Amuge

Nigeria’s equities market experienced its single-day decline in a month on Thursday, as a period of sustained bullish sentiment gave way to a wave of profit-taking. The sell-off, driven by investors cashing in on a strong year-to-date rally, wiped N358 billion off the market’s capitalisation.

The benchmark All-Share Index (ASI), a key barometer of market performance, tumbled to close at 145,300.01 points, a sharp drop from the 146,055.89 points recorded just a day earlier. This decline, which represented a 0.34 per cent  fall, brought the total market capitalisation down from N92.284 trillion to N91.926 trillion. The correction, while painful for day traders, served to moderate the market’s year-to-date return to a still-impressive 41.17 per cent.

The day’s trading was characterised by a decisively negative market breadth, with 51 stocks declining against just 21 that managed to advance. This lopsided sentiment across the trading floor signaled a broad-based retreat, rather than a selective re-evaluation of a few stocks. This was the fifth day of losses for the week, with the market’s weekly return now in negative territory. 

The sharpest losses were concentrated in a group of mid- to high-capitalised stocks, several of which reached the 10 per cent daily limit. Among the most notable decliners were C&I Leasing Plc and UPDC Plc, both of which saw their share prices plunge by 10 per cent to close at N7.20 from their previous day’s value of N8.00. Similarly, Lasaco Assurance Plc, a bellwether in the insurance sector, plunged by 10 per cent to N4.50, shedding 50 kobo off its previous closing price. This category of maximum-loss stocks also included Sovereign Trust Insurance Plc and Wema Bank Plc, both of which saw their share prices fall by a full 10 per cent.

The contagion spread across several key sectors. The insurance sector, in particular, was a major casualty of the day’s trading, with its index shedding 8.26 per cent. This was a direct result of a sell-off that impacted not only Lasaco and Sovereign Trust but also other major players like AXA Mansard Insurance, which saw a nearly 10 per cent dip, and AIICO Insurance, which was down by 9.89 per cent. The banking sector was not spared, with a number of leading institutions, including SterlingNG, Zenith Bank, and GTCO, all recording losses. The decline in the banking sector by 0.48 per cent highlights how profit-taking was not confined to a single industry but was a widespread phenomenon.

Other notable decliners on the day included NGX Group, Custodian Insurance, Dangote Sugar, Cadbury Nigeria, NEM Insurance, and United Capital Plc. The fact that a wide array of stocks, from financial services to consumer goods and industrial players, were affected indicates that the market correction was a broad re-assessment of valuation rather than a targeted exit from a specific sub-sector.

The sell-off was widely attributed by market analysts to the actions of profit-takers investors who opted to monetise their paper gains from the year’s stellar performance. Over the preceding months, the Nigerian equities market had been on an unprecedented bull run, driven by a combination of factors including a pro-business government agenda, improved corporate earnings, and the search for assets that could provide a hedge against high inflation. The market’s year-to-date return of over 41 per cent had created a fertile ground for a correction.

While the bearish trend was dominant in terms of price movements, market activity remained robust. The total volume and value of trades actually increased, a sign that the sell-off was met by strong buying interest at lower valuations. The total volume of shares traded soared by over 81 per cent to 2.46 billion units, and the total value of trades jumped by nearly 10 per cent to N22.22 billion.

Despite the bearish mood, some stocks managed to buck the trend. Juli Pharmacy Plc, Austin Laz & Company, and NCR Nigeria all led the day’s gainers, with price appreciations of 10 per cent, 9.91 per cent, and 9.43 per cent, respectively. 

On the volume index, Universal Insurance Plc led with 390 million shares traded, accounting for nearly 16 per cent of the day’s total volume. This was followed by AIICO Insurance Plc, with 236 million shares, and Linkage Assurance Plc, which traded 214 million shares. 

In terms of value, Nigerian Breweries Plc topped the chart, trading stocks worth N1.8 billion. Ellah Lakes Plc was a close second, with equities valued at N1.7 billion, while Access Holdings Plc traded shares worth N1.2 billion.