Investors lose N3.52trn as NGX sell-off cuts YTD return to 59.93%

Investors in the Nigerian equities market lost N3.52 trillion in one week as renewed selling pressure swept across major sectors of the Nigerian Exchange (NGX), eroding portfolio values and pushing the market’s year-to-date return below 60 per cent.

The downturn reduced the NGX All-Share Index (ASI) by 2.13 per cent to 248,877.22 points, from the previous week’s level, while market capitalisation shed the same percentage to close at N161.59 trillion.

The decline means investors lost approximately N3.52 trillion in the value of their equity holdings during the week, reflecting the scale of the market correction after months of strong gains. The market’s year-to-date return consequently moderated to 59.93 per cent.

The sell-off also exposed the fragility of investor sentiment, with declining share prices across several heavyweight stocks suggesting that profit-taking was no longer restricted to a handful of counters.

Cowry Asset Limited attributed the bearish performance to profit-taking and portfolio rebalancing ahead of the year-end trading period, noting that investors were reassessing positions amid elevated share prices, changing portfolio allocations and expectations surrounding corporate earnings.

The investment firm said the correction reflected growing caution among market participants following the strong rally recorded earlier in the year.

Although the market remains substantially higher year to date, the latest losses indicate that investors are increasingly focused on protecting accumulated gains and identifying more attractive entry points.

Market breadth reinforced the negative sentiment, with 57 equities declining against 29 gainers, translating to a breadth ratio of 0.51x. This indicates that nearly twice as many stocks lost value as those that appreciated during the week.

Trading activity also contracted sharply, pointing to a significant reduction in market participation. Total traded volume fell 62.87 per cent to 2.83 billion shares, while transaction value declined 67.32 per cent to N208.51 billion across 192,173 deals.

Cowry Asset said the steep fall in turnover suggested that investors were less willing to commit fresh funds amid prevailing uncertainty and bearish sentiment.

The contraction in trading value is particularly significant because it points to weaker buying activity at a time when falling prices are already reducing portfolio valuations. While lower turnover may reflect investors’ reluctance to trade, it also suggests that a decisive recovery will require stronger demand to absorb selling pressure.

Sectoral performance offered little relief, as all major NGX indices closed in negative territory.

The Industrial Goods Index recorded the steepest decline, falling 4.35 per cent, driven by losses in HBM Nigeria, Dangote Cement, UPDC Real Estate Investment Trust and CWG.

The Oil and Gas Index dropped 3.72 per cent, weighed down by ETERNA, while the Banking Index declined 2.45 per cent following sell-offs in Access Holdings, Zenith Bank, First HoldCo and Fidelity Bank.

The Commodity Index shed 2.33 per cent, reflecting losses in Aradel Holdings, Japaul Gold and Presco. Consumer Goods stocks fell 1.41 per cent, while the Insurance Index recorded a marginal decline of 0.03 per cent.

The relatively mild contraction in insurance stocks suggests that the sector experienced less selling pressure than other segments of the market, although it was unable to escape the broader downturn.

At the individual stock level, Honeywell Flour Mills led the gainers with an appreciation of 30.8 per cent, followed by Transpower (+23.4 per cent), eTranzact International (+14.4 per cent), Mansard Insurance (+9.8 per cent) and The Initiates (+9.6 per cent).

Their performances showed that selective buying interest persisted despite the broader market weakness.

On the losing side, Vitafoam Nigeria led the decliners, shedding 19 per cent, followed by Sovereign Trust Insurance (-17 per cent), ETERNA (-15.8 per cent), ABC Transport (-13.6 per cent) and International Energy Insurance (-12.8 per cent).

Looking ahead, Cowry Asset expects market activity to remain sensitive to portfolio repositioning, profit-taking and investors’ search for attractive entry points.

The firm said renewed buying interest could support a recovery, particularly if investors take advantage of lower prices in fundamentally sound companies. However, it warned that weak market breadth and sharply reduced turnover could delay a sustained rebound.

Attention is expected to remain on heavyweight stocks, corporate earnings, dividend prospects and developments affecting domestic liquidity.

For investors, the immediate challenge is to distinguish between stocks experiencing temporary profit-taking and those facing deeper valuation or earnings concerns. With the market still posting a strong year-to-date return despite the latest correction, the next direction will depend largely on whether buyers return in sufficient strength to reverse the broad-based sell-off.