New Telegraph

Capital market investors lose N1.3trn in H1’21

Investors in equities recorded a loss of N1.298 trillion during the half year of 2021 following massive profit taking and low sentiment to growing concerns about the rising insecurities in the country. Analysts attributed the drop in the indices to sell pressure by investors, saying the trend may be sustained as investors continue offload shares to leverage the appreciation recorded largely during the first month of the year.

Available statistics to New Telegraph showed that activities on the Nigerian Exchange Limited (NGX), which opened the trading year at N21.058 trillion in market capitalisation and 40.270.72 in index at the beginning of trading on January 4, 2021, closed the half year of in June at N19.760 trillion and 37,907.28 index points, hence earning a year to date loss of about N1.298 trillion or -6 per cent year to date. The Nigerian equities market had ended the first month of 2021 on an impressive note, as investors increased their buying pressure, especially on blue-chip stocks.

The equities benchmark recorded its highest return rising 5.3 per cent to become the Africa’s best performing stock. Positive sentiments had returned to the local bourse, as the gradual release of corporate earnings bolstered buying interests in dividend-paying stocks. This was further strengthened by the outcome of the MPC meeting which reinforced the theme of “lower for longer” yields in the FI market.

However, investors in equities recorded a loss of N1.758 trillion during the last two months (February and March) 2021 following massive profit takings and low sentiment to growing concerns about the rising yields in the fixed Income market. However, equity trading on the floor of the (NGX) ended the month of April 2021 on an impressive note as positive sentiments returned to the local bourse.

The gradual release of Q1 corporate earnings bolstered buying interests in dividend-paying stocks to close the market with a gain of about N419 billion or two per cent. Notwithstanding, investor recorded a loss of N813 billion during the month of May following another massive profit takings and low sentiment to growing concerns about the rising insecurities in the country. With uncertainties about the direction of yields in the FI market still bugging investors’ minds, the bears are likely to retain dominance in the market.

The yields in the fixed income market has continued to dampen investors’ interest inequities as the bearish performance in the (NGX) remained unabated. According to analysts, “following an impressive start to the year wherein the ASI gained 5.3 per cent in January, domestic investors have sold down equity investments in reaction to the rapid yet expected changes in yields in the FI market. “In our 2021 outlook, we stated that the market would deliver further upside in the first half before retracing in the second half due to an uptick in FI yields.

However, contrary to our expectations, yields began trending upwards in February. “As a result, bearish sentiments dominated the local bourse in H1-2021 as the ASI fell below the 40,000 psychological mark on February 26 – the first time since November 30 2020. The main trigger for the bearish mood in the market emanated from the OMO auction conducted by the CBN at the twilight of February, where stop rates rose by an average of 467bps to 8.5 per cent. “This sent signals to investors that the era of the low yield environment had finally run its course. With domestic investors Although consensus expectations were that yields would begin to trend upwards in H2-21, the earlier than anticipated uptick in yields led to portfolio rebalancing activities towards fixed income securities.”

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