The industrial products industry had a difficult August, concluding the month with a notable 13% month-to-date decline.
Other industries ended the month on a positive note, in sharp contrast to this decline.
With a trading volume of 340 million shares, the industrial goods index had already begun to exhibit indications of weakening in July, concluding the month down 5.6% from its closing level in June.
This autumn, which persisted into August, was consistent with the general selling pressure seen in the All-Share Index (ASI).
The industrial products index continued its negative trend as selling pressure persisted in the financial markets, plunging 13% by the last trading day of August.
What to note
Other industries saw growth in August, despite the industrial products sector’s struggles. The largest performer was the oil and gas industry, which increased by 22.39% because of robust buying pressure in large-cap stocks like Oando.
The insurance industry experienced a notable surge as well, closing August 11.46% higher than July’s finish. In the meantime, the consumer goods and banking industries saw more moderate increases, rising by 4.30% and 6.96%, respectively.
With a 107.9% gain in January, the industrial goods index had a strong start to the year as investors chased large-cap stocks in the industry that paid dividends.
But this impressive showing was fleeting, as the industry saw a steep fall in February. The selling pressure that started then persisted throughout the ensuing months, leading up to a difficult August.
Some stocks ended the month in positive territory, despite the industrial goods sector’s overall decrease.
With a rise of 5.93%, Berger Paints topped the gains, followed by Cutix (4.58%) and Lafarge Africa (2.17%).
Nevertheless, the sector’s overall poor performance was exacerbated by decreases in large-cap equities, including Dangote Cement and BUA Cement.
Analyst Perspectives
A prominent expert on the Channel’s Capital Markets TV program, Mustapha Alao, pointed out that the industrial goods sector was a significant drag on the All-Share Index.
He emphasized the industry’s bearish influence, noting, “The industrial bus fell by 1.22% this week, but it would have been worse without the significant gain in the oil and gas sector, which increased by 22.3%. The industrial products industry was a major drag.”
Alao added that strong buy pressure in the oil and gas sectors was starting to support the ASI.
In 2024, the industrial goods sector is anticipated to continue to be negatively impacted by the nation’s high inflation rate and continued currency devaluation, both of which have contributed to the industry’s recent underperformance.
Stakeholders will be keenly monitoring any indications of recovery or further deterioration in this crucial industry as market conditions change.
