By Chinwendu Obienyi
Quoted securities investors in the Nigerian stock market suffered a haircut of over N813 billion in the month of May as trading for the month was rounded off yesterday. The Nigerian Exchange Group (NGX) had gained N418 billion in April on the back of impressive 2020 full-year financial results and positive 2021 first-quarter corporate earnings.
But profit-taking and investors’ preference for fixed income instruments led to the loss recorded in the month under review.
Daily Sun investigations revealed that the market’s All Share Index (ASI) which opened the month at 39,834.42 points closed yesterday at 38,437.88 points, while market capitalisation closed at N20.034 trillion after an opening value of N20.847 trillion.
This meant that investors lost N813 billion in the month of May as the Month-to-Date (MTD) and Year-to-date (YTD) returns slipped further into negative territory, settling at -4.0 and -5.0 per cent, respectively.
Speaking to Daily Sun via a telephone chat, market operators noted that the escalating insecurity across the country led to loss of confidence in the economy. They added that the uptick in the fixed income market contributed to the volatility that rocked the equities market.
The Chief Executive Officer, Highcap Securities, David Adonri, explained that unlike April where the equities market gained over N400 billion as a result of the impressive 2020 earnings from quoted companies, the market in May had no priced sensitive information to elicit any reaction.
“In the absence of that, the only information was the weak economic situation of the country, especially the escalating rate of insecurity across the country, this reduced the confidence of investors in the economy and also in the market. Secondly, this forced financial assets to migrate from equities to fixed income instruments as there was an uptick in that space.
When the economy is unfavourable, investors tend to move to safer terrain and so the migration of equity investors to the fixed income market was not surprising considering the returns in that segment. Looking at the NGX report, the aggregate price of fixed income for bonds appreciated in the month of May.