Nigerian stocks ended the month of March on a bearish trend

The Nigerian Stock Market All Share Index ended March with a negative return of 0.91, reversing back-to-back advances in January and February.

This is also the fifth year in a row that the stock market has lost ground in March, making it one of the most gloomy months for investors. In the last five years, no other month has had as many straight years of losses as January.

During the month, the bulk of Nigerian stocks released their audited financial results, followed by dividend declarations and other corporate actions. This, however, was unable to prevent stocks from losing ground in March.

There were a total of 23 gains and 79 losses across the months. Nairametrics monitors 158 active equities across the Main Board, Premium Board, REITs, Closed Funds, and Exchange Traded Funds categories.

Impact on the Economy

Nigerian equities are mainly associated with the price of oil and a stable exchange rate, but they do not respond to economic indicators such as inflation and the GD Growth rate.

Despite the fact that oil prices hit 8-year highs, equities failed to gain traction as investors failed to see any positive influence from the gains on stock prices.

Rather, Nigerians were confronted with an energy crisis, with petrol and diesel shortages wreaking havoc on businesses. During the month, for example, diesel prices reached an all-time high of N650/liter.

Nigeria's currency rate problem, on the other hand, continues to wreak havoc on the influx of FX foreign portfolio investors who generally drive demand higher.

The central bank also maintained its low benchmark interest rates and the same monetary strategy as in previous years.

Even as economic indicators worsened throughout the month, the CBN ascribed the increases in February and March to "gradually strengthening macroeconomic fundamentals" that "enable improved outcomes and returns on investments from companies quoted on the Nigerian Exchange Limited."

What caused the setback?

According to research, the wave of markdowns that happened during the month when stocks closed their registers for dividend payments was a big factor in the losses.

For example, throughout the month, 9 of the 24 stocks that declared dividends closed their books. High-volume equities like Zenith Bank, GT Bank, UBA, and Nigeria Breweries are among them.

The high price to earnings multiple of some of the most highly valued stocks could possibly be a factor in the losses. The SWOOTs, MTN, Dangote Cement, and Airtel, for example, all achieved year highs during the month before being rescinded.

Agro stocks such as Okomu Oil and Presco have also reached new highs.

Most equities look to be out of reach in terms of values, indicating that investors have reached an overbought condition.

Losers and Gainers

Wema Bank topped the gainer's chart with a 184 percent increase, bringing its year-to-date gains to 279 percent.

PZ and Presco are in second and third place, with gains of 51% and 28% for the month, respectively.

Nigeria Insurance and RT Briscoe were the biggest losers, with losses of 33% and 31%, respectively. This year, RT Briscoe is still up 195 percent.

Except for NPF Microfinance Bank (+19%) and Fidelity Bank (+7%), all of the listed banks ended the month in the red.

Only MTN gained 6% in the SWOOTs, while BUA Foods and Nestle lost 3% and 3%, respectively. Airtel, BUA Cement, and Dangote Cement all ended the day unchanged.