Shareholders in banks quoted on the main and premium boards of the nation’s stock market reported a cumulative loss of about N92 billion during the month of March 2021 following massive profit taking and negative sentiments for concerns about rising yields in the fixed income market.
Checks by New Telegraph revealed that the stocks recorded loss of N92 billion or 3.4 per cent to close at N2.614 trillion in market capitalisation on the last trading day of the month as against opening figure of N2.706 trillion at the beginning of trading on March 1, 2021.
Analysts attributed the drop in the indices to profit taking by investors, saying the trend may be sustained as investors continue to leverage the appreciation recorded in the month of January. Investment analysts explained that apart from the rising yields in fixed income, profit taking by investors also played a part in dragging the local bourse down.
David Adonri, Managing Director/CEO, Highcap Securities, explained that the equities market responds to macroeconomic realities, saying: “Declining yield in debt and high macroeconomic liquidity drove the equities market up in January, but in February, the situation is different.”
Though he said that the main driver was now corpo- rate disclosures, he asserted that many investors are apprehensive that corporate fundamentals may not justify the rally in equities. He said: “As a result, investors are adopting defensive strategies until proved otherwise by stocks, which will meet or surpass expectations.”
He observed that the market may also be experiencing some correction, arguing that the last appreciation was too excessive.”
Speaking in the same vein, Mallam Garba Kurfi, Managing Director/CEO, APT Securities and Fund, attributed the bearish trend to profit taking activities, saying that February had eroded gains made in January in the last three consecutive years in 2019, 2020 and now 2021, despite changes made by the Nigerian Stock Exchange (NSE) in its financial reports filing rule where companies are made to release their management account for the fourth quarter before declaration of audited accounts.
Agreeing with them, Mrs. Toyin Sanni, Group CEO, Emerging Africa Capital Group, said: “The increasingly attractive yields in the fixed income market were definitely a huge factor in the downturn of the equity market.
The next most important factor is profit taking. “Considering that the NSE was the best performing stock market in the world in the year 2020, it is only natural that investors will begin to realise some of their profits.
“Also, the release of not-soimpressive companies’ full year performance reports for 2020 characterized by COVID-19 is also a major factor.”