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Chinwendu Obienyi
Amid huge loss of approximately N158 billion in March, the bearish trend in the Nigerian stock market does not appear to be slowing down as trading activities have kicked off the second quarter on a negative footing.
Market stakeholders had projected that reduced political tension after the general elections and release of corporate results, including declaration of dividends, would lead to recovery.
However, the market has remained bearish, having shed 6.01 per cent year-to-date (ytd) in four consecutive sessions of Q2 with investors ignoring the 2018 financial results of companies. As at last Thursday, the All-Share Index (ASI) slipped into the 20,000 level, declining by 0.39 per cent from the opening figure of 31,041.42 points to close the session at 29,553.12 points. This represents a loss of 1,488.3 points.
Also, market capitalisation which opened at N11.672 trillion, decreased by N572 billion to close at N11.100 trillion.
Nineteen stocks depreciated in value while 11 others appreciated. CAP topped the losers’ chart with 9.89 per cent to close at N33.70 per share. Unity Bank followed with 9.30 per cent to close at 0.78 kobo, Eterna fell by 8.05 per cent to close at N4, Regal Insurance dropped 8 per cent to close at 0.23 kobo while Union Diagnostics lost 8 per cent to close at 0.23 kobo.
On the flipside, Chams topped the gainers’ chart with 10 per cent to close at 0.22 kobo per share. Forte Oil was next with a gain of 9.82 per cent to close at N27.40, Vitafoam garnered 7.84 per cent to close at N385, Cornerstone increased by 4.76 per cent to close at 0.22 kobo while Oando rose by 3.13 per cent to close N4.95.
Stakeholders are of the view that something urgent needs to be done to ensure that the lull does not continue this week.
Research Analyst at Financial Derivatives, Bolanle Agbaje while speaking during the Business Morning programme at Channels Television, noted that there is an absence of a positive trigger which could drive an upturn in the market.
According to her, “the situation going on currently is something to actually look at and we are in a high risk society and it is expected to see the upturns and downturns in the market. We do not expect the bearish run to continue in the next week when things balances”
Speaking to the media during the 1st quarter Capital Market Committee (CMC) meeting which held in Lagos recently, Acting Director-General, SEC, Mary Uduk, said the market is information driven and will bounce back.
She said, “The market depends on several factors, some are global and others are domestic. Some are industrial and some are also in terms of the company’s performance.
There was a time we did 42 per cent and there was also a time we did -17 percent, there would always be sentiments. What is very important about the market is that in the long run even though you have fluctuations. The stock exchange index started in 1984 with 100, today we are in over 30,000. There will definitely be ups and downs, but the market will bounce back”.
For his part, Chief Executive Officer, Susman and Associates, Dr Shamsusdden Usman while delivering a lecture titled, “Driving Financial Inclusion through the Capital Market,” explained that unlike other markets that had fully recovered from the global financial crises of 2007-2008, Nigeria’s capital market had continued to suffer from investor apathy and other sundry issues.
Usman, a former Minister of Finance and National Planning, advocated for a complete review of the market in line with the current realities in the global financial market in order to re-address the issue of investor confidence and leverage the market for financial inclusion. He advocated a one-stop financial centers in line with some foreign markets. He stated that he instituted a project called ‘Voice and Voting Power’(VPP) in which major stakeholders are involved with the aim of finding lasting solutions to the challenges facing the capital market.
Usman identified some of VPP’s recommendations as development of the commodities exchange ecosystem, encouraging more trading through tax incentives, deepening of Islamic Finance and other non-interest products, development of bond market, reduction of the average costs of issuing equity and debt securities, relaxation of complex legal, regulatory and listing requirements and greater use of simple and innovative technology among others.
