At the end of the week on May 24, both the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation experienced a decrease of 0.52%, ending at 97,612.51 points and ₦55.218 trillion, respectively. In contrast, most indices closed in negative except for NGX MERI Value, NGX Consumer Goods, NGX Oil and Gas, NGX Lotus ll, and NGX Industrial Goods, which saw gains of 1.74%, 0.31%, 0.72%, 0.44%, and 0.19%. The NGX ASeM index remained unchanged at the close of trading.
There was a decrease in the number of equities that increased in price during the week, with 24 seeing gains compared to 28 in the previous week. Conversely, the number of equities that decreased in price increased, with 53 experiencing losses compared to 51 the week before. However, the number of equities that remained stable rose to 77, up from 76 in the previous week. During the recent trading week, the Central Bank of Nigeria’s Monetary Policy Committee took additional steps to control Inflation by increasing the policy rate to 26.25%, a rise of 150 basis points.
Vetiva Research predicts an increase in buy-side in the banking sector.
The MPC maintained a 45% cash reserve ratio and an asymmetric corridor of +100bps to -300bps for deposit money banks. Additionally, the liquidity ratio was held steady at 30%. Despite this, the market is facing strain as Investors seek Security in fixed-income investments. Vetiva Research analysts based in Lagos predict that there will be an increase in buy-side activity in the banking sector in the upcoming week. This is expected to occur as traders look to capitalise on the opportunity presented by the low prices of certain stocks that have experienced losses in recent trading sessions.
Equities dealers engaged in transactions involving 1.986 billion shares valued at ₦40.715 billion through 38,487 deals, as opposed to the previous total of 1.652 billion shares. During the previous week, a total of 1.577 billion shares worth ₦30.359 billion were traded within the Financial Services Industry, representing 79.41% equity turnover volume and 74.56% of the value. This marked a significant contribution to the 38,123 deals with a total turnover, amounting to ₦42.677 billion.
Banks experience an increase in equity turnover.
Also, the Conglomerates Industry saw trades of 125.342 million shares valued at ₦1.387 billion across 2,283 transactions, while the Consumer Goods Industry had a turnover of 77.327 million shares, totalling ₦2.446 billion in 4,916 deals. Ecobank, one of the leading equities, also experienced active trading. In terms of volume, a total of 1.006 billion shares valued at ₦20.115 billion were traded in 6,849 deals by Transnational Incorporated Plc, Access Holdings Plc, and United Bank for Africa Plc. These three companies collectively contributed 50.67% and 49.40% to the overall equity turnover volume and value.
In the latest trading session, a total of 5,340 units of exchange-traded products were traded at a value of ₦2.350 million in 111 deals. This marks an increase from the previous week, where 4,103 units were traded at a value of ₦2.429 million with a total of 110 deals. Additionally, there were 82,778 units of Bonds traded at a value of ₦80.570 million in 18 deals, compared to the previous week, where 9,282 units were traded at a value of ₦8.945 million in 24 deals.
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On the other hand, despite the recent downturn in the stock market, savvy investors may view this as a potential buying opportunity as they can capitalise on undervalued assets. The increase in buy-side activity in the banking sector, as predicted by analysts, could signal renewed interest in the market, potentially leading to a turnaround in sentiment and a rebound in stock prices. The recent steps taken by the Central Bank to control inflation could provide stability and certainty for investors in the market. By addressing inflation and monetary policy concerns, the market may see increased confidence from both domestic and international investors.