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Chinwendu Obienyi
The rapid spread of coronavirus and weak oil prices continued to creat fear among investors who took risk-off approach towards the equities market, thus driving Nigeria’s stock market to its worst weekly loss in recent time.
This was as Daily Sun investigations revealed that despite the rebound in the market on friday, the NSE All-Share Index (ASI) depreciated by 13.49 per cent to close at 22,733.35 points while market capitalisation dropped over N1.56 trillion to close at N11.846 trillion.
Some investors had hit the panic button with many dumping securities in their possession as shown in the market’s month-to-date (MTD) and year-to-date (YTD) losses which rose to -11.9 and -15.3 per cent, respectively.
Although, activity level on the bourse improved with total turnover at 3.96 billion shares worth N43.703 billion in 26,054 deals were traded this week by investors, in contrast to a total of 1.814 billion shares valued at N26.008 billion that changed hands in the previous week in 23,494 deals.
However, sector performance was bearish as all indices recorded losses. The Banking (-26.8 per cent), Consumer Goods (-14.9 per cent), Oil & Gas (-7.1 per cent), Industrial (-5.7 per cent), and Insurance (-5.1 per cent) indices, all closed in red while the NSE ASeM Index closed flat.
Reacting to the development, the Acting Director-General of the Securities and Exchange Commission (SEC), Mary Uduk, said that the global decline in oil prices and outbreak of coronavirus is likely to affect the country’s capital market.
Uduk noted that the Nigerian economy as well as other economies are tied to oil, with its effect being global on various’ markets.
The Acting director-general, who regretted that the country’s 2020 budget had been threatened by the fall in the price, said concerted efforts were required to tackle the issue.
“This thing is everywhere and our capital market is global just like any other capital market. You will recall that the other day in New York, they had to shorten the period of trading because of the amount of losses. Whatever it is that will affect any other country of the world right now will affect the Nigerian Capital market, the oil, the coronavirus.
Right now the government has convened a conference that is looking at how these things are affecting the economy of Nigeria and you know that the budget 2020 is already seriously threatened because the benchmark was at N57 but now, oil price has gone down”, she said.
According to her, “It is a serious thing, so all of us need to sit down and say what can we do, it is not just one sector, it has to be concerted efforts by all”.
Speaking further, the Chairman of Association of Securities Dealing Houses of Nigeria (ASHON), Chief Oyinyechukwu Ezeagu, said investors should take advantage of the current bear market to beef up their portfolios.
Ezeagu said rather than panic, investors should take advantage of the bearish trend to increase their investments in stocks, noting that the market would soon stabilize and bounce back.
Although Ezeagu acknowledged the high level of downswing on the market in the last couple of days, he stated that fundamentals of the quoted companies remained strong. He explained that Nigeria’s stock market remained part of the global exchanges and as such any development in the global market would impact on its operations.
“The effect of the coronavirus is gradually affecting trading all over the world and whatever happens elsewhere reflects in our market. The centre of it all is China and being a major world power both in productive and consumption capacities, any ill wind affecting China would naturally cause a big sneezing to the rest of world. Investors should not panic as share prices will bounce back”, Ezeagu said.
On their part, Cordros Capital, in their weekly assessment of the market, said, “looking ahead, we still see sizeable legroom for further down-slide in risk assets as investors continue to run towards safety in the face of the precipitous decline in oil price”.
Meanwhile, two (2) equities appreciated in price during the week, lower than thirty-six (36) equities in the previous week. Sixty- four (64) equities depreciated in price, higher than twenty- five (25) equities in the previous week, while ninety- seven (97) equities remained unchanged, lower than one hundred and two (102) equities recorded in the preceding week.
The Financial Services industry (measured by volume) led the activity chart with 3.547 billion shares valued at N33.623 billion traded in 19,150 deals; thus contributing 89.48 and 76.94 per cent to the total equity turnover volume and value respectively.
The Consumer Goods followed with 91.135 million shares worth N6.007 billion in 2,341 deals while the Conglomerates industry recorded a turnover of 88.406 million shares worth N132.508 million in 679 deals.
Trading in the Top Three Equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc (measured by volume) accounted for 2.448 billion shares worth N29.563 billion in 12,301 deals, contributing 61.75 and 67.64 per cent to total equity turnover volume and value respectively.
