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Sell-off in 22 stocks drag NGX indices by N197b as global market plunges

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Analysts predict gloomy outlook as Russia, Ukraine crisis persists

As U.S stocks tumbled, following investors’ apprehension that a more aggressive approach to curbing inflation would plunge the economy into a recession, the nation’s equities market also closed on a downturn yesterday as a sell-off in 22 stocks dragged the Nigerian Exchange Limited (NGX) market capitalisation by N197 billion.

The All Share Index (ASI) decreased by 364.31 absolute points, representing a dip of 0.694 per cent to close at 52,411.09 points. Similarly, the market capitalisation lost N197 billion to close at N28.255 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Airtel Africa, BUA Foods, Conoil, Nigerian Exchange Group (NGXGroup) and Eterna.

Reacting to the development, analysts at GTI Securities Limited said, “The Nigerian equities market closed bearish, as the Federal reserves raised its benchmark interest rates by 0.75 per cent, its most aggressive hike since 1994. We expect cautious trading and profit-taking to continue tomorrow in the domestic market.”

Vice President of Highcap Securities, David Adonri said the rising insecurity in the country and other macroeconomic challenges, coupled with uncertainty in the global economy are fueling the decline in the equities market.

“The decline in the equities market is due to several factors which include domestic and US interest rate hike, low volume of crude oil sales due to theft, rising domestic inflation rate, rising insecurity, primary bond issuance by FGN and possibly massive sale of stocks by politicians to finance primary elections”, he said.

However, he argued that the downturn is more from domestic issues, noting that only impressive Q2 results can trigger another rally in the market and change the situation.

Market breadth closed negative, with 22 losers versus 12 gainers. Linkage Assurance recorded the highest price gain of 9.80 per cent, to close at 56 kobo, per share. Courteville Business Solutions followed with a gain of eight per cent to close at 54 kobo, while Japaul Gold & Ventures appreciated by 6.90 per cent to close at 31 kobo.

Chams Plc went up by 4.17 per cent to close at 25 kobo, while UACN Property Development Company (UPDC) appreciated by 4.08 per cent to close at N1.02 kobo.

On the other hand, Conoil led the losers’ chart by 10 per cent, to close at N28.80, per share. BUA Foods followed with a decline of 9.97 per cent to close at N53.75 KOBO.

e-Tranzact International went down by 9.96 to close at N2.44 kobo. CWG Plc lost 9.62 per cent to close at 94 kobo, while Eterna shed 6.25 per cent to close at N7.50 kobo.

However, the total volume traded rose 12.51 per cent to 211.614 million shares, worth N2.365 billion, and traded in 4,750 deals. Transactions in the shares of Sterling Bank topped the activity chart with 63.662 million shares valued at N97.449 million.

Zenith Bank followed with 17.335 million shares worth N382.567 million, while United Bank for Africa (UBA) traded 17.333 million shares valued at N131.852 million.

Transnational Corporation of Nigeria (Transcorp) traded 16.173 million shares valued at N21.035 million, while FBN Holdings (FBNH) transacted 10.295 million shares worth N101.015 million.

With the Federal Reserve struggling to get on top of inflation that proved more persistent and widespread than investors anticipated, the Dow which had rallied on Wednesday dropped by 2.1 per cent, or about 639 points while the S&P 500 and tech-heavy Nasdaq Composite fell by 2.7 per cent and 3.5 per cent

Other global stocks also fell as the pan-continental Stoxx Europe 600 index dropped 2.3 per cent, with sharp losses for rate-sensitive technology firms and economically sensitive retail stocks. In Asia, the Hang Seng in Hong Kong fell 2.2 per cent, while Japan’s Nikkei 225 added 0.4 per cent.