As an asset class, domestic equities largely outperformed global peers in H1’22, with the NGX All-Share index delivering a 17.9% local currency gain. Our diagnosis primarily revealed the impact of FY’21 & Q1’22 earnings releases, conflict-induced hike in commodity prices, and FX repatriation demand for dual-listed tickers. Notwithstanding, performance was largely lacklustre in July (-2.8%; 7M’12: +17.9%), which coincided with the Monetary Policy Committee’s second MPR increase of 2022 and relatively uninspiring Q2’22 earnings.
Market sentiments in August largely mirrored July’s, with sharp selloffs by large holders triggering panicky responses as fund managers scurried to limit portfolio exposure. In our view, the aversion to equities also mirrored the increased attractiveness of short-term fixed income securities, which informed a rotation into the latter. For context, financial system liquidity was largely constrained, with interbank rates around 15.0% for most of August and placements for large institutions coasting around similar levels.
Overall, for the month, the NGX All-Share Index and NGX 30 declined by 1.1% (YTD: +16.7%) and 2.4% (YTD: +3.2%), respectively. Despite the bearish fever,
trade flows improved as volume traded and turnover value expanded by 19.5% and 23.1% to 4.7 billion units and ₦62.4 billion, respectively.