NGX loses N11.6 trillion in June as market correction deepens
By Aboki Forex —
The Nigerian stock market is heading for its first negative June in four years. This ends a strong start to the year that saw the Nigerian Exchange add almost N60 trillion in market capitalisation between January and May.
Investors have now rushed to lock in profits. Dividend markdowns on heavyweight stocks and a shift of liquidity to the Dangote Refinery private placement have driven the sell-off. The NGX has lost about N11.6 trillion this month alone.
The correction is broad based. The All-Share Index entered June with year-to-date gains near 60%. Those returns have now been trimmed to below 50%. Every major NGX sector index has ended the month in the red.
Banking stocks have fallen hardest. They dropped 9.6% during the month. The NGX 30, Premium and Industrial Goods indices have all recorded declines of more than 7%.
Several factors converged at once. A market that rallied by almost 60% in five months was overdue for a correction. Investors rebalanced portfolios ahead of the second half of the year. Dividend adjustments accelerated selling pressure. The Dangote Refinery private placement attracted more than $5 billion in demand, diverting institutional liquidity away from listed equities.
The market is also undergoing structural changes. The NGX recently moved to a T+1 settlement cycle. This reduces settlement time from two business days to one. Faster settlement improves liquidity and allows investors to recycle capital more quickly. The Exchange has also extended trading hours, giving participants a longer window to execute transactions.
Neither reform is designed to stop a market correction. They are unlikely to reverse sentiment overnight. But both could influence how quickly liquidity returns to the market.