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Chinwendu Obienyi
Nigeria’s quoted securities ended another week of losses as worries over the impact of the novel coronavirus outbreak and oil prices flops hunted global economies through the week.
The sentiment led to a total value of N278 billion being shaved off the Nigerian Stock Exchange total market capitalisation even as sell-offs in the shares of Dangote Cement and Nestle pushed the All Share Index (ASI) well into the bearish space, falling by over 2.4 per cent to close at 22,198.43 points and N11.568 trillion respectively.
Accordingly, the Month-to-Date (MTD) and Year-to-Date (YTD) losses increased to -15.3 and -17.3 per cent, respectively. Also, sectoral performance was mixed as the Industrial Goods (-4.9 per cent), and Consumer Goods (-3.2 per cent) indices fell sharply, while the Insurance (+2.8 per cent), Banking (+0.3 per cent) and Oil & Gas (+0.2 per cent) indices rebounded. Furthermore, the volume of transactions fell by 66.7 per cent as a total turnover of 2.804 billion shares worth N32.559 billion in 31,715 deals were traded during the week by investors, in contrast to a total of 3.964 billion shares valued at N43.703 billion that changed hands the previous week in 26,054 deals. Reacting to the development, analysts who spoke to Daily Sun, said investors reacted adversely to elevated risks associated with the spread of COVID-19 and declining oil prices and urged the government to come with new measures to contain the spread of the virus.
According to them, there remains sizeable legroom for further downside in risk assets but it is expected that the market would recover as soon as the virus is contained and oil prices return to stability.
Head, Research, FSL Securities, Victor Chiazor, said although the impact of the coronavirus has been immediate, the market would see some more rallies before the year ends.
Chiazor said, “The market’s year-to-date loss stands at -17.3 per cent, the biggest loss in a decade and now we have seen a loss of over N1 trillion for investors. I think the fears about that is strictly around the devaluation, once we keep supporting the Naira the way the CBN has been doing, then we should expect a decision in the foreign reserves and once that goes below N30 billion, I do not think the CBN will have enough armoury to defend the Naira anymore”.
According to him, “These investors especially the foreign ones are thinking about hedging against the possible outcome of these and so they are going into the safer instruments which might include the Eurobond option or dollar assets. But there remain this aura of uncertainity, but by and large especially in the long term, we expect the market to recover and so i will advise investors not to panic or dump their shares because even if we eventually face devaluation, foreign investors will come back to the market because our assets will become cheaper”
Afrinvest, in their weekly assessment of the market, said, “In the coming week, we expect the bearish trend to persist in the absence of any major market catalyst to stimulate investors’ appetite towards the equities market”.
For their part, Cordros capital, said, “Looking ahead, we still see sizeable legroom for further downslide in risk assets as investors continue to run towards safety in the face of the fast-spreading coronavirus pandemic and the rout across global markets”.
Meanwhile the Financial Services industry (measured by volume) led the activity chart with 2.508 billion shares valued at N25.292 billion traded in 23,243 deals; thus contributing 89.44 and 77.68 per cent to the total equity turnover volume and value respectively. The Conglomerates followed with 60.873 million shares worth N105.948 million in 767 deals while the Services industry recorded a turnover of 51.296 million shares worth N117.545 million in 350 deals.
Trading in the Top Three Equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and FBN Holdings Plc (measured by volume) accounted for 1.635 billion shares worth N21.282 billion in 15,631 deals, contributing 58.32 and 65.37 per cent to the total equity turnover volume and value respectively. Thirty-five (35) equities appreciated in price during the week, higher than two (2) equities in the previous week. Twenty- seven (27) equities depreciated in price, lower than sixty- four (64) equities in the previous week, while one hundred and one (101) equities remained unchanged, higher than ninety- seven (97) equities recorded in the preceding week.
