By Emmuel Enitan
Nigeria’s equities market suffered a sharp reversal on Tuesday, losing about N1.88 trillion in market capitalisation as investors intensified profit-taking and repositioned portfolios ahead of the highly anticipated initial public offering (IPO) of Dangote Petroleum Refinery.
The sell-off dragged the Nigerian Exchange (NGX) All-Share Index down by 1.17 per cent, from 247,699.78 points to 244,802.11 points, while market capitalisation fell from N160.60 trillion to N158.72 trillion.
The breadth of the decline underscored the intensity of the selling pressure, with only four stocks recording gains against 62 decliners, as investors cut positions across banking, insurance and other large-cap stocks.
First HoldCo led the major large-cap decliners, tumbling 9.30 per cent to N136 from N149.95. Access Holdings followed with a 7.06 per cent decline, United Bank for Africa (UBA) shed five per cent, Zenith Bank fell 3.94 per cent, while Guaranty Trust Holding Company (GTCO) declined 1.52 per cent.
The development came barely a day after the market crossed the N160 trillion capitalisation threshold for the first time, suggesting that investors were locking in gains after a prolonged rally.
The market’s year-to-date return subsequently moderated to 57.31 per cent, from 59.18 per cent recorded at the previous session.
Market analysts attributed the sell-off partly to portfolio repositioning ahead of Dangote Refinery’s IPO, with investors seeking to raise liquidity to participate in what is expected to be one of the largest capital market transactions in Nigeria’s history.
The Dangote Refinery IPO is scheduled to open for subscription on September 14, with the company offering 4.1 billion ordinary shares at N525 each and targeting about N2.15 trillion in proceeds. The offer is expected to close on October 13, with trading anticipated to commence in November.
The scale of the proposed offer has heightened expectations that institutional and retail investors may reallocate portions of their existing equity portfolios to fund subscriptions.
Managing Director, Globalview Capital Limited, Aruna Kebira, said the preparation for the IPO had contributed to the market’s sharp reversal, noting that investors were selling existing holdings to raise funds for the offer.
According to him, the imbalance between selling and buying orders was significant, with sales at his firm substantially exceeding purchases during the session.
The pressure was particularly pronounced in the banking sector, which recorded the steepest sectoral decline, falling 5.29 per cent. The Insurance Index also dropped 4.38 per cent, while the Industrial Index declined 0.64 per cent.
In contrast, the Oil and Gas Index gained 5.76 per cent, while the Commodity Index rose 4.04 per cent. The Consumer Goods Index also edged up 0.49 per cent.
Trading activity increased significantly despite the market decline. Total volume rose 84.67 per cent to 753.17 million shares, compared with 407.85 million shares previously, while turnover increased marginally by 2.09 per cent to N27.82 billion.
The number of deals also rose by 3.30 per cent to 54,051, indicating that the sell-off was accompanied by substantial portfolio repositioning rather than a broad withdrawal of investors from the market.
NEM Insurance dominated trading volume with 131.73 million shares valued at N4.07 billion across 168 deals, while Access Holdings recorded 36.91 million shares traded in 2,421 deals worth N1.05 billion.
Ellah Lakes emerged as the best-performing stock, gaining 7.07 per cent to N9.85, while NGX Group, Learn Africa and Wema Bank also recorded modest gains.
However, the widespread losses suggest that investors are becoming increasingly selective as they balance the opportunity presented by the Dangote Refinery offer against the prospects of existing equity holdings.
The planned refinery IPO is expected to raise approximately N2.15 trillion, equivalent to about $1.63 billion, through the sale of 4.1 billion shares at N525 each. The offer could also be increased through a greenshoe option if demand exceeds the initial allocation.
The refinery, which began operations in 2024, plans to use the proceeds as part of an ambitious expansion programme that will increase its processing capacity from about 700,000 barrels per day to 1.4 million barrels per day by 2029. The company has also disclosed plans to invest $14.3 billion in the expansion.
For the Nigerian capital market, the IPO represents a major test of the depth of domestic liquidity and investors’ appetite for large-scale primary market offerings.
The immediate pressure on equities, however, indicates that some investors may be funding their participation through the sale of existing assets, potentially creating short-term volatility across the secondary market.
With the IPO opening next week, market participants are now watching to see whether the current profit-taking continues or whether fresh liquidity attracted by the Dangote offer ultimately strengthens overall market activity.
