NGX sheds N5.42trn in 20-day market correction

After hitting a historic peak of N160.40 trillion on July 31, the Nigerian Exchange (NGX) experienced a 20-day bearish run in the following month. Driven by widespread profit-taking as investors cashed in on stellar mid-year gains, the market shed N5.42 trillion, bringing the total equity valuation down to N154.98 trillion by the close of trading on August 20.

This decline dragged the NGX All-Share Index (ASI) down by 2.14 percent, falling from 245,283.69 points to 240,037.80. Despite the August slump, year-to-date returns remain robust at 54.73 percent.

The selling pressure disproportionately impacted low-cap equities, insurance companies, and major oil and gas players. International Energy Insurance led the decline, frequently maxing out its daily 10 percent loss limit as speculative buyers aggressively locked in profits. Fortis Global Insurance, Royal Exchange, and Coronation Insurance also suffered steep double-digit corrections despite massive trading volumes.

Adding to the insurance sector’s woes, the National Insurance Commission (NAICOM) formally revoked Universal Insurance’s license following a heavily scrutinised recapitalization process. In a single stroke, this regulatory decision converted a functioning listed equity into worthless paper.

Beyond insurance, Aradel Holdings faced significant pullbacks following prior rallies, weighing heavily on the Oil & Gas index. Dangote Sugar Refinery also saw a remarkable decrease, dragging down consumer goods heavyweights as institutional funds rotated out of equities.

Market analysts attribute the ongoing capital rotation to rising yields in the secondary market, making alternative instruments and fixed-income securities…