Investors Lose Over N280B In August Due To Low Purchasing Power, Insecurity

Latest market analyses indicate that macroeconomic challenges alongside uncertainty in the global economy are major causes for the loss of about N283 billion in August 2022. This also means investors lost over N280 billion during the month.

Part of these macroeconomic challenges are low purchasing power and a high level of insecurity. Both have affected the equities sector of the Nigerian Exchange Limited (NGX) as investors lost 1.07% of the market value.

The equities market in August saw a rise in inflation rate as the Central Bank increased the Monetary Policy Rate. The MPR was raised to 14% and alongside scarcity of foreign exchange that has led to apathy from foreign investors.

The NGX indices have been negatively affected by these indicators indices in August. However, the market retained a positive position in its Year-till-Date (YTD) performance, as investors gained N4.58 trillion.

A review of sectoral indices during the month revealed that the NGX Industrial Index suffered the biggest decline. It dropped 13.8% to 1,777.14 basis points from 2,062.30 basis points it opened for trading. Oil & Gas index also depreciated by 4.3% to 532.15 basis points from 556.28 basis points it opened for trading.

All these contributed to how investors lost more than N280 billion in the just concluded month.

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Meanwhile, NGX banking index gained 2.4% to close at 387.41 basis points from 378.21 basis points. Also, NGX Insurance Index increased by 7.9% to close at 180.23basis points in August. This is from the 167.04 basis points it closed for trading in July.

Expert Speaks…

According to business analyst Wole Adeyeye, some investors migrated from stock market to fixed-income market. He said they did this in a bid to take advantage of high yields.

He said the trend is likely to continue because rates in the fixed-income market are expected to remain relatively high. He added that foreign investors may not patronise the Nigerian equities market at the moment. He gave the reason for this as the uncertainty surrounding the economy.