The Nigerian equities market closed August on a bearish note, shedding N587 billion in market capitalisation. This was due to weak investor participation and disruptions associated with the transition to a new settlement structure.

Market capitalisation, which opened the month at N158.326 trillion, fell by 0.37 per cent to close at N157.739 trillion.

Similarly, the All-Share Index dropped by 1,084.29 points, or 0.44 per cent, from 245,283.68 recorded at the beginning of the month to 244,199.39 at the close of trading.

The market recorded 13 loss sessions against seven gain sessions during the 20 trading days in August, reflecting the sustained selling pressure that characterised much of the month.

Despite the decline in market capitalisation, trading volume increased by 50.8 per cent, with investors exchanging 26.867 billion shares valued at N634.801 billion in 899,053,057 deals. This compared with 17.817 billion shares valued at N1.184 trillion in 1,166,154 deals recorded in July.

The figures showed that while trading volume increased, value traded declined by 46.4 per cent, while the number of deals also fell by 22.9 per cent.

Market analysts attributed the subdued performance partly to disruptions arising from the implementation of the new settlement structure, which affected the participation of some key investors.

Tajudeen Olayinka, managing director, Wyoming Capital and Partners, said recent adjustments to the equities market settlement system had, however, helped to ease the disruptions and improve liquidity.

Mr Olayinka said this in an interview while assessing the market’s August performance and outlook for September. He said the market experienced significant disruption from late July through August, as some key investors, particularly foreign investors, stayed away due to challenges associated with the new settlement structure.

According to him, the new system required investors to pre-fund transactions, which affected the participation of some foreign and local investors.

“The disruption was likely from the non-immediate acceptance of the new structure by some institutional investors, mostly foreign, and even some local investors,” he said.

Mr Olayinka said that the situation affected expected market activities as investors adjusted to the new settlement cycle. He said subsequent fine-tuning of the system had helped restore confidence and improve liquidity in the market.

He specifically referred to adjustments to the settlement timeline, including extending the deadline for settlement-related debit alerts from noon to 5:00 p.m. the following day.

The market expert expressed optimism that the improvements recorded toward the end of August could provide a platform for a stronger performance in September.

Mr Olayinka said increased liquidity and renewed investor reactions were already becoming evident in the final trading sessions of August. He said the FTSE Russell’s confirmation of Nigeria’s reclassification to Frontier Market status in September would also boost positive sentiment for the market.