The Nigerian Exchange (NGX) witnessed a significant market downturn on Thursday, with investors losing N613 billion as selloffs intensified, particularly in Unilever and other consumer goods stocks. The market capitalization dropped to N67.9 trillion, reflecting a broad-based decline that erased previous gains.
Market Indices Decline Amid Sustained Sell Pressure
The NGX All-Share Index (ASI) fell by 1.1% to close at 111,234.56 points, down from the previous day's 112,456.78 points. This decline brought the year-to-date return to 32.5%, still positive but lower than the peak earlier in the month. The market breadth was negative, with 28 stocks declining against 12 advancers, indicating widespread selling pressure across sectors.
Unilever Nigeria Plc was the biggest laggard, shedding 10% of its share price to close at N45.00 per share. Other consumer goods stocks, including Nestle Nigeria and BUA Foods, also recorded losses, contributing to the sector's overall decline. The consumer goods index dropped by 2.3%, the worst-performing sector index of the day.
Investors React to Earnings and Macroeconomic Concerns
According to analysts at Lagos-based investment firm, Meristem Securities, the selloff is driven by profit-taking after a recent rally, as well as concerns over rising inflation and interest rates. "Investors are rebalancing their portfolios ahead of the upcoming monetary policy committee meeting, and the consumer goods sector is particularly sensitive to these macroeconomic factors," the analysts noted in their daily market report.
The NGX Banking Index also fell by 0.8%, while the Oil & Gas Index declined by 1.5%. However, the Industrial Goods Index bucked the trend, gaining 0.3% due to gains in Dangote Cement. Activity levels were mixed, with total volume traded down 12% to 350 million shares, but total value traded up 15% to N8.2 billion, indicating higher-priced transactions.
Market Capitalization Drops Below N68 Trillion
The market capitalization, which had crossed the N68 trillion mark earlier in the week, closed at N67.9 trillion, erasing over N613 billion in investor wealth. This is the largest single-day loss in the past month. The decline was broad-based, affecting both large-cap and mid-cap stocks, with notable losers including MTN Nigeria, Airtel Africa, and Dangote Sugar.
Despite the downturn, some analysts see this as a healthy correction. "The market had risen sharply over the past few weeks, and this pullback provides an opportunity for long-term investors to enter at better valuations," said a portfolio manager at a Lagos-based asset management firm, who preferred anonymity.
Market Outlook and Investor Sentiment
Looking ahead, market participants expect continued volatility as investors digest corporate earnings and await the central bank's policy direction. The NGX has been on a bullish run since the beginning of the year, driven by reforms in the foreign exchange market and improved corporate earnings. However, recent data showing a rise in inflation to 33.2% has raised concerns about the sustainability of the rally.
Thursday's selloff underscores the fragile nature of the market's gains, with consumer goods stocks particularly vulnerable to changes in consumer spending and input costs. As the market closes the week, investors will watch for any policy announcements that could influence trading in the coming sessions.
