Investors Lose N663bn as NGX Suffers Bearish Run

The Nigerian Exchange Limited (NGX) closed on a negative note this week as a wave of bearish trading wiped off N663 billion from the market capitalization, deepening concerns among investors already grappling with economic headwinds. The downturn, which affected major sectors including banking, industrial goods, and consumer goods, has underscored growing unease in the equities market despite recent policy reforms aimed at boosting investor confidence.

Data from the NGX revealed that the market capitalization, which opened the week at N56.08 trillion, fell sharply to N55.42 trillion by the close of trading, reflecting heightened sell-offs across several blue-chip stocks. The All-Share Index (ASI) also mirrored the decline, shedding 1.18 percent to close at 97,473.98 basis points. Analysts attributed the slump to profit-taking activities, weak investor sentiment, and uncertainties in both the local and global economic environment.

Market watchers noted that the financial services sector was among the hardest hit, with banking stocks experiencing significant losses. Top-tier banks, which had previously recorded gains from improved first-half earnings, witnessed sharp declines as investors moved to lock in profits. Similarly, equities in the industrial goods and consumer goods sectors struggled under heavy sell pressure, dragging the overall market performance further into the red.

The oil and gas sector also failed to offer respite, as global crude price volatility and concerns over Nigeria’s domestic energy policies weighed on investor appetite. With foreign exchange scarcity continuing to disrupt dollar-denominated transactions and repatriation of profits, foreign portfolio investors maintained a cautious stance, limiting inflows into the market. This further compounded liquidity pressures on the exchange.

Operators within the capital market have expressed concern that the sustained bearish trend could discourage retail investors, many of whom entered the market with hopes of riding on the back of reforms introduced by the Bola Tinubu administration. These reforms, particularly in the areas of foreign exchange unification and subsidy removal, initially sparked optimism but have since produced inflationary pressures and eroded purchasing power, affecting investment decisions.

Analysts at several investment firms explained that while the market downturn may appear alarming, it is not entirely unexpected given the cycles of profit-taking and corrections that often follow periods of sustained rallies. They emphasized that the broader economic indicators, including persistent inflation, high interest rates, and currency depreciation, remain strong determinants of market direction.

In the fixed-income space, yields on government securities have continued to rise, offering investors safer alternatives to equities. Many institutional investors are said to be shifting funds into treasury bills and bonds, which currently provide attractive returns in the face of market volatility. This shift, analysts argue, has further drained liquidity from the equities market, deepening the bearish mood.

Despite the losses, some industry stakeholders maintain a cautiously optimistic outlook. They argue that current valuations in the equities market could present buying opportunities for long-term investors willing to withstand short-term shocks. Sectors such as telecommunications, agriculture, and fintech are seen as potential drivers of recovery if structural reforms are sustained and economic conditions stabilize.

Market operators have also urged regulators to intensify efforts to attract foreign capital by addressing foreign exchange liquidity concerns and ensuring policy consistency. They stressed that without significant foreign participation, the market may continue to experience shallow liquidity and heightened volatility, which undermines its ability to drive economic growth.

In the short term, experts say investor sentiment will remain tied to macroeconomic developments, particularly government measures to curb inflation and stabilize the naira. They highlighted the importance of the upcoming monetary policy decisions of the Central Bank of Nigeria (CBN), noting that interest rate adjustments could significantly influence portfolio rebalancing between equities and fixed-income securities.

Meanwhile, retail investors across the country have expressed frustration over the steep market decline, with many worried about eroded portfolio values. Some have called on government agencies and market regulators to intensify investor education and provide transparent updates on reforms that directly affect investment choices.

As the market braces for the next trading sessions, observers say the key challenge will be restoring confidence and reversing the bearish tide. While short-term pressures may persist, the overall health of the market will depend on the resilience of listed companies, fiscal reforms, and the ability of regulators to maintain stability amid global economic uncertainty.

The sharp drop in capitalization has once again highlighted the vulnerability of Nigeria’s equities market to both domestic policy shocks and external pressures. For now, investors remain cautious, weighing the risks of further declines against potential opportunities in undervalued stocks. The coming weeks will be decisive in determining whether the NGX can stage a rebound or sink deeper into bearish territory.