NGX Trading Volume Drops To 77% As Inflation Concerns Weigh On Investor Sentiment

The Nigerian Exchange (NGX) Limited experienced a sharp drop in trading volume last week, with transactions falling by 77 percent as investors reassessed their portfolios amid prevailing macroeconomic uncertainties.

Recent data from the exchange showed that trading volume dropped significantly, with investors transacting 1.482 billion shares worth ₦38.875 billion in 44,795 deals. This marked a stark contrast to the previous week, where 6.468 billion shares valued at ₦75.745 billion were exchanged in 48,804 deals.

The financial sector emerged as the most active, contributing 72.04 percent of the total trading volume and 50.98 percent of the total value. Investors traded 1.068 billion shares valued at ₦19.820 billion across 21,001 deals in the sector. Energy stocks followed, with 103.143 million shares worth ₦11.351 billion traded in 8,200 deals, while consumer goods stocks recorded 77.198 million units valued at ₦2.845 billion in 4,266 transactions.

The significant drop in trading volume coincided with key economic developments, including the release of inflation data by the National Bureau of Statistics (NBS) and recent discussions between President Bola Tinubu and International Monetary Fund (IMF) Managing Director, Mrs. Kristalina Georgieva, during the latest G20 Summit in Brazil. These factors heightened investor caution and led to reduced exposure to local equities.

Despite the decline in overall trading activity, some stocks posted impressive gains. John Holt was the top performer, appreciating by 60.50 percent to close at ₦7.72. Eunisell followed with a 46.22 percent increase, closing at ₦11.99. Tantalizers also performed well, gaining 43.90 percent to settle at ₦1.18, while Sunu Assurances and Flour Mills rose by 32.04 percent and 22.89 percent, closing at ₦2.72 and ₦78.65, respectively.

In contrast, DAAR Communications saw the steepest loss, declining by 12.12 percent to 58 Kobo. Oando dropped by 10.44 percent to ₦62.65, VFD Group fell by 10.00 percent to ₦40.50, Abbey Mortgage Bank decreased by 9.77 percent to ₦2.40, and Ellah Lakes dipped by 7.36 percent to ₦3.40.

The NGX All-Share Index (ASI) and market capitalisation managed to record slight gains, rising by 0.50 percent to close at 97,722.28 points and ₦59.215 trillion, respectively. However, the performance of sectoral indices was mixed. While most indices recorded gains, the energy and industrial goods sectors saw declines of 0.29 percent and 0.20 percent, respectively, with the ASeM and sovereign bond indices remaining flat.

The week’s performance reflects a cautious sentiment among investors as they navigated the implications of domestic inflationary pressures and global economic developments. While financial stocks continued to dominate market activity, broader investor confidence appeared tempered, with external and internal economic factors influencing market direction.