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Chinwendu Obienyi
There appears to be no respite for Nigeria’s stock market as negative sentiments ruled the first four consecutive trading sessions with the Year-to-Date (YTD) loss worsening to 11.3 per cent.
Despite the listing of Airtel Africa in the previous week, the All Share Index (ASI) of the Nigerian Stock Exchange (NSE) still declined by 2.4 per cent to 28,566.79 points while YTD loss stood at 9.1 per cent.
Investors had hoped for a better outing but sustained sell pressures had been the theme of the market throughout the week.
At the sound of the closing gong on Thursday, the benchmark index fell by 0.64 per cent to settle at 27,864.49points. The fall in the broad index was due to sell pressure in Seplat, MTN and ETI while market capitalisation contracted by N87 billion to close at N13.579 trillion. This means that investors have lost over N342 billion in four consecutive trading sessions.
Furthermore, activity level was weaker as 175.36 million units of shares worth N2.71 billion were traded, representing a decline of 28 per cent and 30.2 per cent respectively in 2,653 deals.
Sector indices mirrored the market performance as 5 indices lost, except the Industrial Goods index which rose 0.1 per cent. This was on account of the bargain hunting activities in the shares of Wapco (+0.4 per cent).
Conversely, the Oil & Gas index declined the most, down 4.7 per cent against sell-offs in Seplat (-9.43 per cent). The Insurance index followed with a 1.7 per cent decline due to price depreciation in NEM (-9.2 per cent), the banking index shed 1.2 per cent following losses in ETI (-9.1 per cent), the Consumer Goods and AFRI-ICT indices were down 0.4 and 0.5 per cent respectively following sell pressures in International Breweries (-10.0 per cent) and MTNN (-0.8 per cent).
Market breadth remained negative as 19 stocks depreciated in value while 12 others appreciated. Berger topped the losers’ chart with 10 per cent to close at N6.30 per share, International Breweries followed with 10 per cent to close at N15.30, Seplat dropped 9.43 per cent to close at N480 while Cileasing and NEM both fell by 9.17 per cent to close at N4.95 and N2.08.
On the flipside, Conoil topped the gainers’ chart with 9.76 per cent to close at N20.25 per share. Dangote Sugar was next with 9.22 per cent to close at N11.25, Sovereign Insurance increased by five per cent to close at 0.21 kobo, Japaul oil garnered 4.76 per cent to close at 0.22 kobo while FCMB rose by 4.58 per cent to close at N1.60.
According to market operators, the sustained losses in the shares of stocks is as a result of foreign investors’ frustration over lack of policy direction based on President Muhammadu Buhari’s hesistance in constituting a cabinet.
Speaking to Daily Sun via telephone chat, the Managing Director, APT Securities, Kurfi Garba,noted that the government is yet to do something concrete to arouse the confidence of investors who are trading at the nation’s bourse.
He said, “It is very obvious that from elections till date, the question is what has the government done to arouse the confidence of investors apart from renewing the tenure of the CBN governor? so now, we have a government that takes over 4 months to constitute a cabinet and also the president had signed the budget last month and who will implement this budget when there is no cabinet? if the economy is not moving positively then it will affect the capital market.
So what we are seeing now is the market reflecting the attitude of the Federal Government towards economic policy and their lack of foresight to come out with suitable strategies. we have never had a government with a strong economic adviser and so all these attitude is compounding the problem the stock market is facing”.
Corroborating, Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, noted that the focus of the current administration should be on growing the economy first.
“We have seen an economy that has gone through a recession, contracting by 1.58 per cent in 2016, recovered by 0.82 per cent in 2017 and gained 1.92 per cent in 2018. So the economy has suffered very minimal growth in the past three years with the capital market also experiencing minimal performance since it is the mirror of the economy in terms of performance, so the market could not have been divorced from the problems the economy. And on that note, the focus should be on growing the economy.
If the economy is growing and corporate organisations are making profit and jobs are being created, the market will benefit from it. First, the higher level of consumption, which you have in regards of the demand for goods and services, will impact positively on the revenue of quoted companies as well as non-quoted companies, encourage companies to list and bring foreign direct investments in the economy”. He said.
For his part, Managing Director, Decof Investment limited, Moses Igbrude, attributed the performance of the stock market to the weak macroeconomic environment coupled with insecurity and the indecisiveness of government to constitute its cabinet.
Igbrude said that the expectations of Nigerians especially investors was that once the elections had been done, there would be proactiveness in the sense that the cabinet ought to have been constituted.
“But there is no direction whatsoever and you know that the stock exchange is driven by information and if a government is not doing anything, it should rather communicate with stakeholders.
Now that there is an uncertainty in the air, the investors do not want to take risk. Initially we were nursing the fears of whoever might win the 2019 general elections , but that has come and gone, yet we have not seen any positive trigger. This is really worrisome and we appeal to the government to take the bull by the horn by doing what is necessary to stabilise the economy so as to drive the economy,” he said.
