Nigerian Stocks Lose N334bn In Market Cap As Bears Take Over In July

The Nigerian Exchange (NGX) began the second half of 2024 on a bearish note, experiencing a notable decline of 0.39 percent over the past two weeks.

This downturn has resulted in a substantial loss of N334 billion in market capitalisation. By the close of the week ending July 12, 2024, the NGX’s All-Share Index (ASI) had fallen to 99,671.28, down from the opening index of 100,057.49 at the start of July.

This decline translated into a reduction in the NGX’s market cap from N56.602 trillion at the start of H2 2024 to N56.268 trillion by July 12, marking a N333.5 billion loss.

 Market Performance in 2024

The NGX ended the first half of 2024 with a robust performance, achieving a 33.81 percent increase and an ASI of 100,057.49. However, with the recent decline, the market’s year-to-date return has slightly dipped to 33.3 percent, which is just below the inflation rate in the country.

Performance Highlights

Despite the overall bearish trend, several stocks have stood out with significant gains in H2 2024. Veritas Kapital Assurance has emerged as the best performing stock, appreciating by 33.3 percent in the past two weeks and achieving a year-to-date return of 224.3 percent. The stock is currently trading at N1.20, slightly down from its all-time high of N1.26 reached on July 8.

Conoil Plc follows with a 30.4 percent gain in July, closing with a share price of N137. The company has reported a remarkable year-to-date return of 63.2 percent, bolstered by a 99.9 percent profit growth in 2023.

Livestock Feeds has also shown exceptional gains, appreciating by 25 percent in H2 2024, with an 18.9 percent gain in the week ending July 12. Coronation Insurance recorded a 17.9 percent gain in the week ending July 5, contributing to a 19.4 percent growth so far in July.

AIICO Insurance and Linkage Assurance each achieved 17.9 percent gains in July, with year-to-date returns of 40 percent. United Capital saw a month-to-date return of 17 percent in July, along with a year-to-date return of 22.6 percent.

Associated Bus Company Plc (ABC Transport) closed the week ending July 12 as the best performing stock, with a 20.3 percent return. In July, the stock achieved a month-to-date return of 16.7 percent. Red Star Express Plc rounds out the top ten performers with a 15.1% month-to-date return.

Market Commentary

The current bearish performance of the NGX is a stark contrast to the bullish trend observed in the second half of 2023, when the market recorded a 22.6 percent growth. Last year, economic reforms bolstered investor confidence, propelling the market upward.

However, Q2 2024 saw the NGX depreciate by 4.3%, driven by banking stocks losing nearly a fifth of their value. As the market moves further into the second half of the year, the capital-raising efforts by both banks and non-bank entities are expected to have dilutive effects on existing shares, potentially exacerbating the bearish trend.

The NGX experienced a robust start to 2024, with the All-Share Index reaching a new all-time high of 105,722.78 points on February 18. However, the market’s momentum has since slowed, and the outlook for the remainder of the year remains uncertain. Investors and market watchers are keenly observing whether the current bearish trend will persist, possibly leading to a market performance that falls short of last year’s impressive 45.8 percent appreciation.

Future Outlook

As the NGX navigates the second half of 2024, market dynamics will be influenced by various factors, including economic policies, corporate earnings reports, and investor sentiment. While some stocks have shown resilience and strong performance, the overall market sentiment remains cautious.

The coming months will be critical in determining whether the NGX can regain its bullish momentum or continue on a downward trajectory. Stakeholders are advised to stay informed and strategically manage their portfolios in response to evolving market conditions.