• Saturday, July 13, 2024
businessday logo


Nigeria’s equity investors lost N1.3trn in H1’2021

Nigeria’s equities shed N159bn as profit taking continues

Driven by persistent sell pressure in the month of June, investors in Nigeria’s equities market who held their stocks since the beginning of this year till date are in no small measure beaten by huge loss of about N1.3trillion.

Neither increasing oil prices nor declining inflation rate could spur investors’ appetite for Nigeria’s equities amid pressured parallel FX market. The Brent crude contract for August, due to expire Wednesday June 30, was up 83 cents, or 1.1percent at $75.59 a barrel by 1224 GMT.

Nigeria’s inflation rate dropped further for the second consecutive month to 17.93percent in May 2021 from 18.12percent recorded in April 2021. At the parallel market on June 30, one dollar was exchanged for N503.

Read also: Nigerias SEC says non-interest capital market has great potentials

However, the good news following the terrific loss by equity buyers on Custom Street is that the market will rebound in third quarter (Q3) as investors position ahead of first-half (H1) 2021 corporate scorecards expected on the Nigerian Bourse from second week in July.
This is even as they take advantage of cheap/attractive stocks while also positioning in counters known for paying interim dividend to shareholders. Financial Derivatives analysts had in the LBS executive breakfast session for June, noted that uptick in the fixed income (FI) space will continue to weigh on stock market performance.

Amid reduced participation by institutional investors in the equities market and sustained investor preference for risk free securities, the stock market of Africa’s largest economy witnessed subdued buy activities which resulted to a remarkable dip. The market’s negative return in H1, 2021 stood at -5.87percent.
The Nigerian Exchange Limited (NGX) equities market capitalisation and its All Share Index (ASI) which had opened the year at N21.057trillion and 40,270.72 points respectively stood lower at N19.760 trillion and 37,907.28 points at the close of trading on Wednesday June 30, which ends the first half of year 2021.

Ahead of the last trading day in June, Lagos-based GTI Research analysts expected bargain hunters to take advantage of the recently depreciated stock prices, amid some investors who moved to take profit.

Their counterparts Meristem who acknowledge the relatively low prices of counters across sectors and the bargain-hunting opportunities this presents, said they expect investors’ sentiment to remain predominantly bearish.