NSE LIVE! Equities slump to new low after losing N137b

By Success Allantee…

It was four to one, the game between the downside and upside at the Nigerian Stock Exchange (NSE) again today (Wednesday) ended in favour of the downside, extending the recession at the stock market to the 11th consecutive trading session.

All value-based indices at the stock market ended in the red as the market continued to reel under the negative influence of surplus shares supply amidst reluctant and cautious demand. The All Share Index (ASI), the general value-based index that tracks prices of all quoted companies, crossed another psychological low after losing 1.28 per cent in a trading session overshadowed by large turnover but generally poor pricing.

The ASI closed at a new low of 30,970.51 points as against its opening index of 31,372.90 points. This further depressed the average year-to-date return to -10.64 per cent. Total market value of all quoted companies on the NSE declined from N10.714 trillion to N10.577 trillion, indicating a loss of N137 billion.

With 40 losers against 11 gainers, the market outlook remained negative as widespread selling sentiments underlined fears that lack of clear domestic macroeconomic direction and global crude oil dynamics could extended the losing streak beyond the immediate period.

The market saw above-average turnover as more investors opted to sell at available discounted prices. Total turnover stood at 423.15 million shares valued at N7.49 billion in 3,963 deals. Financial services sector accounted for 348.29 million shares worth N4.88 billion in 2,046 deals. Zenith Bank was the most active stock with a turnover of 234.74 million shares valued at N4.21 billion in 275 deals. Access Bank occupied a distant second position with a turnover of 30.64 million shares valued at N147.73 million in 255 deals. Transnational Corporation of Nigeria placed third with a turnover of 19.59 million shares worth N41.19 million in 225 deals.

Several highly capitalised stocks led the downturn, orchestrating the biggest fall of the market so far this week. Seplat Petroleum Development Company, the only listed oil exploration and production company, topped the decliners’ list with a drop of N16 to close at N319. Nigerian Breweries, the second most capitalised stock and most capitalised breweries stock, followed with a drop of N4.90 to close at N128.60. Dangote Cement, the most capitalised stock that controls one-quarter of market value, dropped by N2.01 to close at N168. Lafarge Africa dropped by N2 to close at N100. Oando dwindled by N1.17 to close at N12.10. Okomu Oil Palm declined by N1.15 to close at N26.01. Presco depreciated by N1.11 to close at N31.19. Ashaka Cement dropped by N1.10 to close at N21.05. PZ Cussons Nigeria lost 95 kobo to close at N28 while Ecobank Transnational Incorporated slipped by 66 kobo to N20.34.

Market analysts said the immediate cause of the worsening depression might not be unconnected with cash demand by investors in preparation of the forthcoming Eid-el Fitr celebration. Many also saw underlying negative sentiments fuelled by weaker than expected half-year results.

Read also: NSE LIVE! Equities’ return worsens amidst inflation push

There were also concerns about the medium to long-term impact of domestic macroeconomic and government policies and international spillovers from the Iran Nuclear deal and possible impact on global crude oil market.

Iran and group of six countries-China, France, Russia, United Kingdom, United States, and Germany, had agreed on a Joint Comprehensive Plan of Action (JCOA) set to constrain Iran’s nuclear programme in return for the lifting of crippling economic sanctions.

“Overall, the nuclear deal and removal of sanctions on oil exports is negative for the oil prices. … We think, either way, oil producing economies like Nigeria will further bear the negative brunt of another anticipated round of declining oil prices, which will potentially hurt the revenue base of these countries,” analysts at SCM Capital, formerly Sterling Capital Markets, had stated.

Besides, foreign investors, which account for more than two-thirds of Nigerian capital market, are concerned about foreign exchange management and the general fiscal and monetary policy directions of the new government as it dilly-dallied on key appointments and pronouncements.

The Tuesday’s announcement of a spike in inflation rate from 9.0 per cent to 9.2 per cent also contributed to the decline.

Many analysts are looking beyond the immediate to medium-term, in a sign that market operators and investment managers might adopt defensive rather than aggressive approach, hoping to hold on to wear out the downturn.

“The recent trend in the market in our view may not support short term investment strategy save for strategically calculated technical arbitraging. Hence, investors are advised to trade with caution while adopting a medium to long term investment perspective as the anticipation of market recovery is patiently awaited,” said analysts at Afrinvest Securities.

On the other hand, Forte Oil led the advancers with a gain of N16.87 to close at N196.87. Total Nigeria followed with a gain of N1.60 to close at N159.60. FCMB Group rose by 24 kobo to N3. Diamond Bank added 16 kobo to close at N3.96 per share while Guinness Nigeria rallied 9.0 kobo to close at N140.

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