Nigeria’s stock market has suffered another weekly setback, shedding more than ₦535 billion in investor wealth despite a fourth consecutive monthly decline in headline inflation, as losses in major banking and telecommunications stocks outweighed gains in selected sectors.
Data from the Nigerian Exchange Limited (NGX) showed that the market closed lower for the third straight week, highlighting the gap between easing price pressures and investors’ appetite for equities.
The NGX All-Share Index, which tracks the performance of listed shares, slipped by 0.33 per cent to 247,539.73 points on Friday from 248,363.55 points a week earlier. Trading losses also dragged down the market’s reported capitalisation.
However, the figures published in the report contain a discrepancy that requires clarification. Vanguard listed the previous week’s market capitalisation as ₦161.260 trillion and the latest value as ₦260.725 trillion, a movement inconsistent with its claim that investors lost more than ₦535 billion. The capitalisation figures therefore need verification before they can be used to calculate the market’s weekly loss.
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Banking stocks lead the retreat
Selling pressure centred on some of the Exchange’s heavyweight stocks. Zenith Bank fell by 6.5 per cent, First HoldCo declined by 3.9 per cent, GTCO lost 4.4 per cent, while MTN Nigeria dropped by 1.8 per cent.
These declines weighed on the All-Share Index because large, actively traded companies can exert significant influence on the market’s overall performance.
The banking sector index fell by 3.1 per cent, while insurance stocks slipped by 0.1 per cent. Oil and gas shares advanced by 3.1 per cent, consumer goods gained 0.1 per cent, and industrial goods closed unchanged.
Trading activity also weakened. Market volume contracted by 39 per cent week-on-week, while transaction value declined by 38 per cent. The figures point to reduced trading activity alongside falling share prices, although they do not, by themselves, establish why investors pulled back.
Despite the recent losses, the market’s year-to-date return stood at 59.1 per cent. Its month-to-date performance, however, had fallen to negative 1.5 per cent.
Why lower inflation has not lifted shares
Falling inflation can improve household purchasing power and reduce pressure on businesses, but it does not automatically trigger a stock market rally. Investors also consider interest rates, corporate earnings, share valuations, exchange-rate risks and the returns available from fixed-income investments.
The distinction matters to Nigerians who invest directly in shares or through funds exposed to the equities market. A decline in inflation may offer some relief to consumers without immediately increasing the value of their investments.
Cordros Capital Limited analysts expect sentiment to recover as investors seek undervalued shares following recent price declines. They also anticipate that third-quarter earnings announcements and upcoming dividend qualification dates could attract selective buying.
InvestData Consulting Limited highlighted another variable: oil prices. Movements in crude prices can affect transport, manufacturing and distribution costs, with consequences that differ from one company to another.
The coming earnings season could therefore help investors distinguish companies with resilient profits from those facing higher operating expenses.
For now, Nigeria’s equities market is sending a mixed signal: its substantial gains since the start of the year contrast with three consecutive weeks of losses. Whether buyers return may depend less on the inflation trend alone and more on corporate results, share prices and expectations for the economy.
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