Highcap Securities Ltd. has attributed the N4.92 trillion stock market loss recorded last week to investor repositioning ahead of the anticipated Dangote Refinery and Petrochemicals Initial Public Offering (IPO).
The Vice-President of Highcap Securities, Mr David Adonri, disclosed this in an interview with the News Agency of Nigeria (NAN) in Lagos.
The Nigerian Exchange Ltd. (NGX) All-Share Index and market capitalisation declined by 3.11 per cent and 3.06 per cent, respectively.
The All-Share Index closed at 242,593.31 points, while market capitalisation settled at N155.594 trillion, down from 250,385.47 points and N160.509 trillion.
Consequently, investors lost N4.915 trillion during the week under review.
All other indices closed lower, except the NGX Sovereign Bond Index, which ended the week unchanged.
Adonri said the sharp sell-off indicated that many investors were raising liquidity in anticipation of the expected IPO.
He noted, however, that several other factors contributed to the market’s bearish performance.
According to him, the market is undergoing a seasonal correction, a trend that has become common after the earnings season.
“There has been a seasonal trend for market correction after the earnings season. Prices usually decline to align with the fundamental values of companies.
“Before the release of full-year corporate results, a lot of exuberance and irrationality usually drive stock prices.
“Once investors have a clearer picture of the financial position of companies, they begin to adjust their portfolios accordingly,” he said.
He explained that investors often dispose of shares in underperforming companies while increasing exposure to fundamentally strong stocks, resulting in market corrections.
Adonri also identified growing political risks ahead of the 2027 general elections as a factor affecting investor sentiment.
According to him, heightened political activity and rhetoric often create uncertainty, prompting some investors to move into cash positions.
“Political risk is usually elevated during election periods, and that tends to frighten some investors.
“As a safety measure, they may liquidate part of their investments and hold cash,” he said.
He added that some capital market operators might have sold financial assets to strengthen their capital base.
The move, he said, was in response to the new minimum capital requirements introduced by the Securities and Exchange Commission (SEC).
Adonri said the combined effect of these factors contributed to the bearish trend recorded during the week.
He expressed optimism that the market could recover after rebounding on Friday.
“On Friday, the market stabilised and rebounded. We hope the recovery will continue next week,” he said.
He added that the current downturn could offer buying opportunities for investors seeking fundamentally sound stocks at lower prices.
Meanwhile, investors traded 3.966 billion shares worth N175.659 billion in 343,587 deals during the week.
This compares with 2.398 billion shares valued at N111.480 billion exchanged in 241,313 transactions the previous week.
The Financial Services Industry led trading activity with 2.690 billion shares worth N69.975 billion in 134,882 deals.
The sector accounted for 67.83 per cent of total equity volume and 39.84 per cent of total turnover value.
The Services Industry followed with 323.601 million shares valued at N6.443 billion in 25,906 deals.
The ICT Industry ranked third with 176.039 million shares worth N27.892 billion traded in 40,837 transactions.
Trading in Access Holdings Plc, Abbey Mortgage Bank Plc and Sterling Financial Holdings Company Plc dominated activity.
The three equities accounted for 1.290 billion shares worth N17.560 billion in 17,768 deals.
They contributed 32.53 per cent of total traded volume and 10.00 per cent of total market value.
Twenty-three equities gained during the week, compared with 34 in the preceding week.
Sixty-five equities declined, up from 51 previously, while 58 remained unchanged, compared with 61 a week earlier.
International Energy Insurance, Abbey Mortgage Bank, Triple Gee, Ikeja Hotel and RT Briscoe emerged as the week’s top gainers.
The companies appreciated by N2.74, N3.00, 39 kobo, N3.80 and N1.21 respectively.
Associated Bus Company, University Press, Eterna, John Holt and First HoldCo recorded the largest losses.
Their share prices fell by N2.04, N1.05, N4.45, N2.05 and N8.00 respectively.(NAN)(www.nannews.ng)