Despite good performance reported by quoted companies in the Nigerian Exchange, uncertainty in the global economy, low purchasing power, insecurity have continued to impact negatively on the stock market as investors lose N283 billion in the month of August.
The NGX trading result for the month of August showed that the market capitalization of listed equities which opened at N27.163 trillion depreciated by 1.07 per cent to close on August 31, 2022 at N26.880 trillion.
The NGX All-Share Index also depreciated by 1.07 per cent to close at 49,836.51 basis points on August 31, 2022 from 50,370.25 basis points it opened for the month.
A review of sectorial indices for the month, indicated that the NGX Industrial Index suffered the highest decline in August, dropping by 13.8 per cent to 1,777.14 basis points from 2,062.30 basis points it opened for trading during the Month.
Oil & Gas Index index went down by 4.3 per cent to 532.15 basis points from 556.28 basis points it opened for trading in August.
On the other hand, the NGX banking index added 2.4 per cent to close at 387.41 basis points from 378.21 basis points, while NGX Insurance Index rose by 7.9 per cent to close at 180.23basis points in August from 167.04 basis points it closed for trading in July.
Reacting on the development in the market, an analyst at PAC Holdings, Wole Adeyeye said some investors migrated from stock market to fixed-income market in a move to take advantage of high yields, which was triggered by the recent hike in policy rate.
“Also, foreign investors avoided the Nigerian stock market due to the upcoming general elections, weak local currency and insecurity in the country.”
He noted that the trend may likely continue in September as yield in the fixed-income market is expected to remain attractive.
According to him, this trend may likely continue in September because rates in the fixed-income market are expected to remain relatively high. In addition, foreign investors may not patronise the Nigerian equities market at the moment due to the uncertainty surrounding the economy.
“Nevertheless, our medium-long term outlook for the Nigerian equities market remains positive. This provides an opportunity for investors that want to take advantage of cheap stocks in the market at the moment.”
Capital market operators who pleaded anonymity said that increase in monetary policy rate to 14 per cent discourages Investment in stock market.
The operator said that rise in inflation rate and scarcity of forex pushed investors to move their funds to fixed income market.
