Nigerians Stocks close August in red as investors dither on economy

The Nigeria All Share Index ended August in the red as investors grappled with a barrage of macroeconomic challenges and uncertainty surrounding bank recapitalization. 

The NGX All Share Index declined by 1.22% in August, marking back-to-back monthly losses after a 2.28% drop in July.

This consecutive monthly decline is the first since April 2023, indicating the bears have a firm grip on the market.

The Nigeria All Share Index, which represents all stocks, declined by 1.22% in August, primarily driven by losses in large-cap stocks, as reflected in the NGX Premium Index.

The All Share Index's year-to-date return has now fallen to 29.1%, down from the March 2024 high of 39.8%.

Stocks have posted losses in three out of the eight months this year, with April experiencing the largest drop of 6%, the largest monthly decline since January 2021.

The NGX Premium Index experienced a substantial 5.16% decline in August, driven by significant losses in SWOOT, Dangote Cement, BUA Cement, and MTN.

These three stocks account for over 27% of the market capitalization. Dangote Cement and BUA Cement saw share price drops of 19% and 20.5%, respectively, while MTN's share price fell 10% due to foreign exchange challenges.

In total, 50 stocks declined in August, while 64 stocks gained, and the remaining stocks ended flat.

Oando Plc topped the gainers chart with a remarkable 435.9% increase, driven by positive news, particularly the acquisition of a significant stake in Agip's upstream asset.

Julius Berger and TotalEnergies also recorded gains of 74% and 73%, respectively.

The losses in August were not limited to the heavyweight stocks, as United Capital, Nestle, and Fidson also experienced declines.

These losses were attributed to profit-taking activities and the impact of dividend payments during the period, as well as investors positioning themselves ahead of the upcoming third-quarter results.

Additionally, a significant portion of retail investors' inflows appears to be directed towards bank recapitalization efforts, diverting attention and capital away from other sectors.