The Nigerian stock market has recently experienced a sharp decline, resulting in a loss of over N539 billion in investor value. The total market capitalization dropped to N56.039 trillion, down from N56.577 trillion the previous week. The NGX All Share Index (ASI) also fell by 0.95%, closing at 97,520.54 points, down from 98,458.56 points.
This bearish trend was primarily driven by sell-offs in major blue-chip companies, notably Dangote Cement, which saw a 10.00% drop week-on-week, and BUA Cement, which declined by 3.42%. The downturn coincided with a broader shift among investors towards fixed-income securities, following the recent increase in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN).
Additionally, the Purchasing Managers’ Index (PMI) for September slipped to 49.2 points, down from 49.8 points in August, indicating a contraction in business activities. Analysts suggest that this contraction may be a consequence of ongoing rate hikes by the monetary authority, which seem to be hindering economic expansion in a bid to attract foreign investment.
As the market prepares for the upcoming third-quarter earnings reporting season, more companies are notifying the exchange about their closed periods and board meeting dates to approve their financial results.
Market Outlook and Analyst Insights
Analysts at InvestData Consulting Limited have indicated that mixed sentiments are likely to persist, driven by profit-taking and portfolio rebalancing activities. They noted that sector rotation is evident, with investors capitalizing on pullbacks to invest in value stocks. Despite the ongoing volatility, there remains potential for upside as investors are encouraged to take advantage of price corrections while keeping an eye on both domestic and global trends.
In summary, while the Nigerian stock market is currently facing challenges, analysts recommend strategic investments in light of expected fluctuations and upcoming earnings reports.