As the world grapples with the emerging scenarios from the last week’s decision of the United Kingdom (UK) to withdraw from the European Union (EU), the Nigerian stock market again came under intense sell pressure on Monday as foreign portfolio investors sought to monetize their assets.
Benchmark indices at the Nigerian Stock Exchange (NSE) indicated a loss of N278 billion or 2.64 per cent on Monday, increasing the momentum of the sell down that saw Nigerian equities losing N144 billion on Friday after the announcement of the Britain’s EU referendum.
In what is popularly called Brexit, the UK voters voted in favour of withdrawal from the 28-nation EU with a simple majority of about 52 per cent. The decision shocked the global markets and triggered a sell down in the Nigerian equities market. Foreign investors account for half of transactions on the Nigerian equities market.
The All Share Index (ASI), the main index for the NSE, dropped by 2.64 per cent from 30,649.66 points to close at 29,840.23 points. Aggregate market value of all quoted companies on the NSE also declined correspondingly by N278 billion from N10.527 trillion to close at N10.249 trillion. The sustained decline reduced the average year-to-date return at the stock market to 4.18 per cent.
Price trend analysis showed widespread selling pressure across the sectors with the NSE Banking Index leading with a drop of 4.08 per cent. The NSE Oil & Gas Index declined by 3.6 per cent. The NSE Industrial Goods Index dropped by 2.5 per cent while the NSE Consumer Goods Index slipped by 0.6 per cent. However, the NSE Insurance Index inched up 0.3 per cent.
Market analysts said the sell pressure was driven by foreign portfolio divestments. Seplat Petroleum Development Company led the 40-stock losers’ list with a loss of N17.37 to close at N331.60. Forte Oil followed with a loss of N10 to close at N190. Dangote Cement declined by N8.09 to close at N192.11. Guinness Nigeria lost N1.90 to close at N109.90. Guaranty Trust Bank dropped by N1.15 to close at N23. Flour Mills of Nigeria lost N1.07 to close at N22.68. Zenith Bank dropped by N1.04 to close at N15.96. Nigerian Breweries declined by N1 to close at N144. Stanbic IBTC Holdings slipped by 85 kobo to close at N16.15 while Cadbury Nigeria dropped by 65 kobo to close at N17.35.
On the upside, Total Nigeria led the 16-stock gainers’ list with a gain of N5 to close at N200. Julius Berger Nigeria rose by N2.20 to close at N46.20. GlaxoSmithKline Consumer Nigeria added N1.10 to close at N23.22 per share. PZ Cussons Nigeria rose by N1.07 to close at N22.65. UAC of Nigeria chalked up 33 kobo to close at N19.99. Fidson Healthcare gathered 22 kobo to close at N2.44 while University Press rallied 21 kobo gain to close at N4.60.
Total turnover stood at 375.22 million shares valued at N4.03 billion in 4,229 deals. NEM Insurance was the most active stock with a turnover of 90.8 million shares worth N82.6 million. Guaranty Trust Bank followed with 56.11 million shares worth N1.3 billion while FBN Holdings placed third with 36.67 million shares worth N151.9 million.
“With investors sentiment dampened by a mixture of credit ratings downgrade by Fitch Ratings as well as the outcome of the Brexit referendum, the Nigerian equities market started the week lower,” Afrinvest Securities noted.
Analysts said the decline may continue on Tuesday but the market may regain uptrend by midweek as investors shake off the bearish sentiments and reposition ahead of the release of second quarter earnings.
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