Nigerian equities recorded its worst performance so far in 2016 on Wednesday as panic gripped investors that continuing decline global crude price might lead to deterioration in Nigeria’s foreign exchange crisis.
Aggregate market value of all quoted companies lost N321 billion, equivalent to a day-on-day decline of 3.6 per cent, the worst performance so far in 2016. The mid-week steep decline worsened the negative eight-day average year-to-date return to -12.4 per cent. In the past three trading sessions, the stock market has lost an average of 7.6 per cent in consecutive negative trading sessions.
The All Share Index (ASI)-the value-based index that tracks prices of all quoted companies on the NSE, dropped to a new low at 25,103.05 points as against its opening index of 26,034.93 points. Aggregate market value of all quoted equities on the NSE dropped from N8.954 trillion to close at N8.633 trillion.
There were 34 losers to three gainers. Nestle Nigeria, Nigeria’s highest-priced stock, led the losers with a loss of N41 to close at N779. Dangote Cement followed with a loss of N7.65 to close at N145.45. Seven-Up Bottling Company dropped by N7 to close at N175. Nigerian Breweries declined by N4.84 to close at N97.18. Lafarge Africa lost N3.55 to close at N91.3. Okomu Oil Palm dropped by N3.51 to close at N32.64. GlaxoSmithKline Consumer Nigeria dropped by N1.50 to close at N28.50. Zenith Bank lost N1.15 to close at N10.93. UAC of Nigeria declined by 97 kobo to N18.59 while Guaranty Trust Bank added 86 kobo to close at N16.39 per share.
Analysts at Afrinvest Securities described the market session as a bloodbath noting that “sentiment for equities collapsed on account of news flow revealing a bearish outlook for crude oil and forex uncertainties”.
“As the depressed market breadth indicates, there still exists active sell pressure in the bourse and we expect further declines in the trading sessions ahead. We also do not see an immediate recovery in sentiments as all macroeconomic indicators and weak policy responses seen so far point to a structural slowdown in growth and tougher operating environment for companies. Despite our expectation of higher inflation rate driven by cost-push factors, we advise clients to overweight on fixed income to preserve capital,” Afrinvest Securities stated in a note after trading session.
Total turnover stood at 369.23 million shares worth N1.69 billion in 2,893 deals. Diamond Bank was the most active stock with a turnover of 88.68 million shares worth N177.37 million in 32 deals. Unity Kapital Assurance followed with a turnover of 70 million shares valued at N35 million in a deal while Zenith Bank placed third on the activities chart with a turnover of 51.44 million shares worth N564.66 million in 536 deals.
On the upside, Ashaka Cement led the contrarian stocks with a gain of N2.26 to close at N26.50. Custodian and Allied added 14 kobo to close at N4.20 while NEM Insurance rose by 2.0 kobo to close at 67 kobo per share.
Many analysts said absence of a clear-cut forex management outlook was a major factor militating against portfolio investments in the Nigerian capital market. Foreign portfolio investors account for the larger percentage of transactions on the Nigerian stock market.
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