Lagos: Investors on the Nigerian Exchange (NGX) lost N2.179 trillion on Thursday as sustained sell-offs in blue-chip stocks extended the market’s bearish run amid adjustments to the new T+1 settlement cycle.
Market capitalisation fell by 1.41 per cent, dropping from N154.445 trillion to N152.266 trillion, while the All-Share Index (ASI) shed 3,397.80 points or 1.41 per cent to close at 237,404.92, down from 240,802.72.
The downturn wiped out part of the market’s gains for the year, with the Year-to-Date (YTD) return moderating to 52.56 per cent. Market breadth remained negative, as 40 stocks declined against 13 gainers.
Cadbury Nigeria, Africa Prudential and Triple Gee led the losers’ chart, each dropping 10 per cent to close at N62.10, N11.70 and N3.60 per share, respectively.
John Holt fell by 9.93 per cent to N12.25, while McNichols declined by 9.33 per cent to N6.80 per share.
On the gainers’ table, Legend Internet rose by 9.52 per cent to N5.75 per share. NPF Microfinance Bank gained 9.18 per cent to close at N5.35, while Transcorp advanced by 7.32 per cent to N44.
Neimeth Pharmaceuticals appreciated by 7.03 per cent to N9.90, while Daar Communications added 5.29 per cent to close at N1.79 per share.
Trading activity improved during the session, with volume increasing by 4.33 per cent to 691.64 million shares valued at N116.85 billion across 50,025 deals.
FirstHoldco emerged as the most traded stock by volume, accounting for 115.84 million shares or 16.75 per cent of total transactions. Dangote Cement dominated the value chart with trades worth N83.39 billion, representing 71.37 per cent of total market turnover.
Meanwhile, Wyoming Capital and Partners attributed the recent market weakness to investors’ adjustment to the T+1 settlement cycle introduced by the NGX.
The Chief Executive Officer of the firm, Mr Tajudeen Olayinka, said the transition had created temporary challenges for traditional institutional investors accustomed to the previous T+2 settlement framework.
The News Agency of Nigeria (NAN) reports that the NGX adopted the T+1 settlement cycle on June 1, under which securities transactions are completed one business day after the trade date.
According to Olayinka, many of the stocks witnessing sharp declines are largely held by traditional investors who are still adapting to the shortened settlement timeline.
“Traditional investors are trying to reposition themselves in terms of how to deal with the T+1 settlement cycle.
“Before now, the extra day gave them the latitude to arrange funds and complete settlements after trades had been executed,” he said.
He explained that the new regime requires investors to prefund transactions, making some institutional investors more cautious.
“Most traditional investors do not like to leave money with brokers before trades are executed. They prefer to pay after the transaction has been completed.
“Now, they have to send funds ahead of the transaction, and that is creating temporary challenges.
“People are not necessarily selling because they want to make a profit. The buy side is simply not there at the moment,” he said.
Olayinka dismissed suggestions that investors were offloading equities to raise cash for upcoming public offers or alternative investments.
He maintained that the market weakness was largely a temporary consequence of the new settlement structure and expressed confidence that investors would soon adjust.
“This is not a major setback for the market. It is merely a temporary adjustment. Over time, investors will find ways to manage the settlement process and the market will stabilise,” he said.
