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NGX All-Share Index Extends Losing Streak to Six Sessions as Nigerian Stock Market Sheds N110 Billion
The Nigerian NGX equities market has now closed lower for six straight sessions. On Wednesday, October 7, the NGX All-Share Index slipped 0.07 percent to 250,096.75 points from 250,273.50 the day before, and total market capitalisation eased to N162.39 trillion from N162.50 trillion. That works out to about N110 billion in value lost in a single session. The daily drop is small, but the run of losses is the longest the market has seen in some time and comes after one of its strongest rallies in years.
Taken one day at a time, the declines look minor. The index fell 0.29 percent on September 29, 0.28 percent on September 30, 0.16 percent on October 2, 0.06 percent on October 5 and 0.16 percent on October 6, before Wednesday’s 0.07 percent. Added together, they have taken the index about 2,538 points, or roughly one percent, below its September 28 close of 252,635.11, the highest level of the past year. The first session of October was a public holiday, so the six losing days run across a seven-day calendar window.
Seen from a longer distance, the retreat is shallow. Even after six down sessions, the market is still up 60.72 percent for the year to date, and the index crossed 200,000 points for the first time only in March. A one percent pullback after a gain of that size is not a sign of stress. It is the market taking a breath, and the question is whether the pause turns into something deeper.
Trading activity gives a mixed answer. Volume on Wednesday fell 22.83 percent to 446.91 million shares, and the number of deals dropped 5.30 percent to 38,808. Lower participation during a decline usually means sellers are not rushing for the exits, which is mildly reassuring. At the same time, buyers are not stepping in with conviction either. Financial stocks dominated the activity, with Zenith Bank and Access Holdings among the most traded names, alongside Critical Minerals Financing Corp and Sovereign Trust Insurance.
The market was not weak everywhere. The insurance sector index edged higher on gains in Coronation Insurance, Guinea Insurance and Regency Alliance Insurance, and the industrial index was almost flat, helped by steady prices at Dangote Cement and BUA Cement. Tripple Gee, Critical Minerals Financing Corp and Champion Breweries each rose by about 10 percent, the maximum daily move allowed. That pattern, with a few sharp winners against a softer overall index, suggests investors are choosing individual stocks rather than buying the whole market, which is typical late in a long rally.
What is behind the slide? No single trigger explains it, and the exchange does not publish who is selling, so the following are reasonable readings rather than established facts. The first is simple profit-taking. After a gain of more than 60 percent in nine months, many holders have large paper profits, and a quiet week is a natural time to lock some of them in. The second is competition from fixed income. The central bank cut its policy rate by 350 basis points to 23 percent on September 22, yet government and central bank paper still pays well. The 182-day OMO bill cleared at 16.92 percent on October 6, and the one-year Treasury bill’s stop rate of 15.85 percent equals a true yield of about 18.8 percent. When safe instruments pay close to 19 percent, shares have to offer more growth or dividends to hold the same appeal.
A third factor is timing around corporate results. Several large banks have delayed their half-year accounts while they wait for regulatory approval, and Zenith Bank has said it hopes to publish by October 9. Investors often hold back from adding to positions in sectors where earnings are about to land, and banks make up much of the market’s trading volume. There is no indication that the delays signal any problem at the lenders, and nothing published points to one. They do mean traders are working with older numbers than usual.
The other side of the argument is liquidity. Rate cuts normally push yields on safe assets lower over time, and the secondary market is already moving that way, with the average Treasury bill yield falling 98 basis points to 17.48 percent on October 6. Money that earns less in bills tends to look for other homes eventually, and equities are an obvious one. Cash returning from maturing securities could add to that effect, since about N9.05 trillion in OMO bills is due to mature this month. Whether the cash ends up in shares will depend on how comfortable investors feel after the recent pullback and on what the results season shows.
For retail investors, the practical message is to avoid reading too much into a one percent move. Anyone who bought earlier in the year is still sitting on a large gain, and anyone considering a purchase now faces a market that has stopped rising but has not broken down. A losing streak by itself is not a reason to sell, and it is not a reason to buy. The more useful questions are whether you have a time horizon of years or weeks, and whether the companies you own are earning enough to support their prices. Investors who need money soon should be wary of equities, however good the year has been, because short-term swings can erase small gains quickly. Those who hold shares for dividends will want to watch the half-year results closely, since payout announcements often accompany them.
Several markers will show whether the retreat is ending. The first is the next close above the 250,000 mark, which the index has held by a narrow margin. If it falls below that level, traders will start talking about a deeper correction. The second is trading volume. A rise in volume on a down day would suggest real selling pressure, while a rise on an up day would suggest buyers are returning. The third is the release of bank results, starting with Zenith Bank, which will either steady sentiment or add to the uncertainty. The fourth is the naira, which traded near N1,333 to the dollar on October 7, a stable backdrop that helps foreign and local investors alike.
The next Monetary Policy Committee meeting on November 23 and 24 will be the next major policy event. Until then, fixed-income auctions, bank earnings and daily market breadth will shape the direction of the stock market. More market and banking coverage is available on Business Tech.
