Nigeria’s Equity Market Opens June with N1.81 Trillion Loss as T+1 Settlement Cycle Begins
The Report
As reported by the Daily Nigerian, the Nigerian equities market commenced the month of June on a negative note, with investors losing N1.811 trillion on the first trading day. The decline, which saw the Nigerian Exchange Ltd. (NGX) market capitalisation drop from N160.508 trillion to N158.697 trillion, represents a 1.13 per cent fall. The All-Share Index also declined by 2,824.81 points, or 1.13 per cent, to settle at 247,560.66.
The downturn was attributed to widespread profit-taking in major equities, including BUA Cement, Trans-nationwide Express, John Holt, Red Star Express, and Deap Capital Management. Market sentiment was weak, with 37 stocks recording losses against 24 gainers. Trading activity also declined, with total volume falling by 6.38 per cent to 1.13 billion shares valued at N44.28 billion, exchanged in 91,880 transactions.
“The decline came as the market began trading under the newly introduced T+1 settlement cycle. The cycle marks a significant milestone in the ongoing efforts to enhance efficiency and competitiveness in the capital market.”
Abbey Mortgage Bank emerged as the most traded stock by volume, while Aradel led the value chart with transactions worth N6.31 billion.
WANA Regional Analysis
The opening-day loss in Nigeria’s equity market, occurring simultaneously with the implementation of the T+1 settlement cycle, carries significant implications for West African capital markets and regional investment flows. The T+1 cycle, which shortens the settlement period from two days to one, is a structural reform aimed at aligning Nigeria’s market with global best practices. However, the immediate market reaction—a sharp decline in valuation—raises questions about short-term liquidity adjustments and investor adaptation to the new system.
From a regional perspective, Nigeria’s stock market remains the largest and most influential in West Africa, serving as a benchmark for investor sentiment across the ECOWAS region. A sustained downturn in Nigerian equities could dampen foreign portfolio investment (FPI) inflows into the region, particularly as global investors often view Nigeria as a gateway to West African markets. The N1.81 trillion loss, while significant, must be contextualised within the market’s year-to-date return of 59.09 per cent, indicating that the correction follows a period of substantial gains.
The profit-taking observed in major stocks such as BUA Cement and Trans-nationwide Express suggests that investors are rebalancing portfolios ahead of the new settlement regime. Historically, West African markets have experienced volatility during periods of regulatory change, as market participants adjust to new operational frameworks. The T+1 cycle, while enhancing efficiency, also reduces the time available for trade financing and may increase operational risks for smaller brokers and investors.
For the broader ECOWAS region, the performance of Nigeria’s capital market is closely watched by policymakers in Ghana, Côte d’Ivoire, and other regional exchanges. A stable and efficient Nigerian market supports regional capital formation and cross-border investment. Conversely, persistent volatility could undermine confidence in the region’s financial infrastructure, particularly as ECOWAS member states pursue deeper economic integration under the African Continental Free Trade Area (AfCFTA).
The decline in trading volume—down 6.38 per cent—also signals caution among retail and institutional investors. This could have knock-on effects for capital raising activities, including initial public offerings (IPOs) and corporate bond issuances, which are critical for infrastructure financing in the region. West African governments and corporations rely on well-functioning capital markets to fund development projects, and any sustained weakness could slow progress on key regional initiatives.
From a governance and regulatory standpoint, the Nigerian Exchange’s implementation of the T+1 cycle demonstrates a commitment to modernising market infrastructure. However, the immediate market reaction underscores the need for robust investor education and communication strategies to mitigate short-term disruptions. Other West African exchanges considering similar reforms should take note of the transitional volatility observed in Nigeria.
Regional Backdrop
Nigeria’s equity market has experienced significant growth in 2024, driven by policy reforms, improved corporate earnings, and increased foreign investor interest. The year-to-date return of 59.09 per cent prior to this decline reflects a bullish trend that has attracted both domestic and international capital. However, the market remains sensitive to macroeconomic factors, including inflation, exchange rate volatility, and monetary policy decisions by the Central Bank of Nigeria.
Across West Africa, capital markets are at varying stages of development. Ghana’s stock exchange has faced challenges related to its sovereign debt restructuring, while the Bourse Régionale des Valeurs Mobilières (BRVM) in Abidjan has shown relative stability. The performance of Nigeria’s market often sets the tone for regional investor sentiment, making developments in Lagos a key indicator for the entire ECOWAS financial landscape.
Original Reporting By:
Daily Nigerian