SAT APRIL 06 2024-theGBJournal| The Nigerian equities market recorded its third consecutive weekly loss as investors contended with the potential implications of the recently announced bank recapitalization plans by the Central Bank of Nigeria (CBN).
Notably, significant selling pressure was evident across tier-1 banking stocks, with FBNH (-14.2%), GTCO (-8.6%), ACCESSCORP (-7.8%), and ZENITHBANK (-4.5%) recording declines. Furthermore, profit-taking activities in MTNN (-2.2%), contributed to the overall market downturn.
Consequently, the All-Share index declined by 1.1% w/w, leading to a moderation in the Year-to-Date return to +38.3%. Despite the overall market decline, activity levels surged, with the total traded volume and value increasing by 104.0% w/w and 11.2% w/w, respectively.
Reflecting the prevailing market sentiments, the Banking (-6.7%) index recorded the most substantial loss, followed by the Insurance (-0.9%) and Industrial Goods (-0.3%) indices. Conversely, the Consumer Goods (+0.9%) index advanced, while the Oil and Gas index closed flat.
Global equities were broadly negative this week as a combination of factors including (1) escalating tensions in the Middle East, rising oil prices, and comments from US Federal Reserve officials indicating a reluctance to cut rates until further confirmation of declining inflation, dampened sentiments.
Consequently, US equities (DJIA: -3.0%; S&P 500: -2.0%) were poised to end the week lower as investors scaled back expectations of a rate cut in the upcoming June meeting. European equities (STOXX Europe: -1.4%; FTSE 100: -0.6%) were set for a weekly loss driven by the hawkish remarks from some US Fed officials and heightened tensions in the Middle East.
In Asia, the Chinese market (SSE: +0.9%) saw gains as a rebound in the manufacturing sector spurred optimism about the nation’s economic recovery. Conversely, the Japanese market (Nikkei 225: -3.4%) declined due to concerns of a strengthened yen hurting exports, rising Middle East tensions, and negative sentiments on Wall Street.
Finally, Emerging Markets index (MSCI EM: +0.5%) closed higher driven by gains in China (+0.9%), while the Frontier Markets index (MSCI FM: +0.2%) recorded a marginal gain following bullish sentiments in Romania (+0.6%).
The value of the Naira to the dollar strengthened by 446 bps week-on-week to print at N1,251.05/$ this week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Whilst CBN’s intervention in the FX market is poised to remain frail in the near term given its low FX reserves, we expect the naira to remain stable in the short term, supported by tighter monetary policy conditions and improved FX liquidity.
This week, Nigeria’s FX reserves decreased by US$317.95 million w/w to US$33.51 billion (03 April) as the Central Bank of Nigeria pushes ahead to stabilize the Naira.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
