Onome Amuge

Nigeria’s equities market opened the week on a bearish note, weighed down by sustained selling pressure in large and mid-cap names, notably Veritas Kapital and Ellah Lakes which dragged key performance indicators into the red. The benchmark NGX All-Share Index (ASI) declined by 0.41 per cent, closing at 139,722.19 points, while overall market capitalisation shed N362.77bn to settle at N88.41 trillion.

The dip trimmed year-to-date returns to 35.37 per cent, underscoring how recent bouts of profit-taking and fragile investor sentiment have slowed the bourse’s previously bullish momentum.

Market breadth remained deeply negative, with only 15 gainers against 32 decliners. Among the hardest hit were Veritas Kapital Assurance (VERITASKAP) and Ellah Lakes (ELLAHLAKES), both of which posted double-digit losses of 10 per cent, which is  the maximum daily downside allowed on the Nigerian Exchange.

The pair’s underperformance reflects not only company-specific headwinds but also broader investor caution across insurance and agribusiness-linked counters, analysts said.

Shares in Veritas Kapital Assurance, a mid-tier insurer, slumped 10 per cent as investors offloaded holdings amid lingering concerns over profitability, capital adequacy, and the slow pace of premium growth. The stock closed as the worst performer of the session, mirroring the Insurance index, which edged down 0.05 per cent.

Market operators said Veritas Kapital has struggled to convince investors that it can capture significant market share in an increasingly competitive industry dominated by larger rivals.

The bearish sentiment towards insurance stocks has been exacerbated by broader macroeconomic conditions, including high inflation and rising claims costs, which are eating into underwriting margins.

Agribusiness group Ellah Lakes also closed limit-down, shedding 10 per cent after a string of sessions marked by thin liquidity and volatile trading. 

The company’s sell-off also dragged on the broader Industrial sector index, which dipped by 0.85 per cent as investors trimmed exposure to stocks with perceived earnings vulnerability.

Beyond the sharp declines in Veritas Kapital and Ellah Lakes, other notable laggards included oil marketing company Eterna (-10 per cent), cement producer Lafarge Africa (-5.38 per cent), and banking heavyweight Zenith Bank (-2.42 per cent).

Sectoral performance was broadly negative, with the Banking index down 1.12 per cent, reflecting pressure on leading names such as Zenith and Access Holdings. The Oil & Gas index slid 0.45 per cent, dragged by losses in Eterna and Oando (-6.25 per cent), while the Consumer Goods sector fell marginally by 0.03 per cent. Only the commodities sector managed to eke out a 0.12 per cent gain.

Traders attributed the broad weakness to profit-taking and thin investor conviction at the start of the month. “We are seeing investors rotate out of mid-cap names, taking profit after the strong rally earlier this year, while awaiting fresh policy signals from the fiscal authorities,” said a portfolio manager at a Lagos-based asset management firm.

The sell-off was accompanied by mixed trading activity. While the total number of deals jumped by 32.22 per cent to 33,859, the overall volume of shares traded slipped 6.24 per cent to 407.98 million units. However, the total value of transactions rose 42.21 per cent to N14.78 billion, buoyed by heavy block trades in energy company Aradel Holdings, which accounted for 36 per cent of the day’s value turnover.

In terms of volumes, FCMB topped the chart, representing 13.76 per cent of all shares traded, followed by AccessCorp (7.87 per cent), Fidelity Bank (6.45 per cent), and NSLTECH (5.51 per cent).

On the gainers’ table, Sovereign Trust Insurance led with a 10 per cent rise, trailed by SCOA (+9.83 per cent), Cornerstone Insurance (+7.98 per cent), Guinea Insurance (+7.75 per cent), and NSLTECH (+4.71 per cent).

Analysts caution that the bearish mood may persist in the short term, given elevated inflation, tight monetary conditions, and fragile investor sentiment ahead of expected policy pronouncements by the Central Bank of Nigeria.

“The pullback is consistent with the broader theme of risk aversion across frontier markets. Investors are cautious about overexposure, especially as yields on government securities remain attractive, drawing liquidity away from equities,”said a senior strategist at Afrinvest. 

While the NGX ASI remains up more than 35 per cent since January, the sustainability of those gains is increasingly being questioned. For many retail investors, losses in high-risk stocks such as Veritas Kapital and Ellah Lakes highlight the volatility of the local market.