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Chinwendu Obienyi
Despite impressive full year 2017 financial audited results released by some companies, investors trading on the floor of the Nigerian Stock Exchange (NSE) lost N158 billion in three consecutive trading sessions.
With the bearish sentiments pervading the market, the All Share Index (ASI) dropped further by 0.46 per cent or 190.93 points to close at 41,495.43 points on Wednesday.
Accordingly, the Month-to-Date and Year-to-Date returns moderated to -4.24 per cent and -8.50 per cent.
Similarly, the sell-offs impacted greatly on the sectors of the NSE with the Industrial goods (-2.50 per cent) index posting the largest loss. It was followed by the Insurance (-0.72 per cent) and Consumer goods (-0.72 per cent) indices. On the flipside, the Banking (+0.06 per cent) index closed positive, while the Oil and Gas index was flat.
At the close of trading, the market capitalisation which opened at N14.912 trillion fell by N68 billion to close at N14.844 trillion, dragging it further away from the N15 trillion mark even as 34 stocks depreciated in value while 19 others appreciated.
After releasing a mixed full year performance, Cadbury Plc maintained top spot on the losers’ chart with 9.64 per cent to close at N12.65 per share. Unity Kapital followed with 7.69 per cent to close at 0.24 kobo while Mansard fell by 7.41 per cent to close at N2.50 per share.
On the positive side, Fidelity Bank topped the gainers’ chart with 7.76 per cent to close at N2.50 per share. Glaxosmithkline and Dangote Flour gained 5 per cent each to close at N22.05 and N15.75 while Guinness appreciated by 4.79 per cent to close at N105.00 per share. Afrinsure was the most active stock, trading 82.774 million shares valued at N20.366 million. Japaul Oil was next with 75.551 million shares worth 42.284 million while Fidelity Bank ranked third, selling over 63.876 million worth N151.42 million.
The momentum of activities however increased from 409.208 million shares to 488.97 million shares valued at N5.64 billion in 5,524 deals. Analysts at Cordros Capital maintained that the outlook of the equities market remains positive and will be supported by strengthening macroeconomic fundamentals.
Speaking to Daily Sun, Chief Executive Officer, Cranes Securities, Mike Eze, pointed out profit taking and market information as the principal factors behind the negativity in the market.
“About three weeks ago, the market went bullish when most stocks particularly from the banking sector, like Diamond bank, Skye bank, Wema bank, FCMB and Fidelity bank all gained 100 per cent in a period of months. So after that, their prices got so high so much that investors decided to take profit. With this development, the market went bearish.
“Secondly, there was market information about some foreign investors who invested in quoted companies, like Japaul Oil and Unity Bank, these investors wanted to have percentage share of those companies, so that again led to the decline of share prices in those companies. Then later,another information filtered in that Japaul and Unity Bank Public department denied the aforementioned information and you know the market is information driven, once there is a negative information, it will affect the price of those stocks, so they went bearish. Principally, two factors for the bearish sentiment is profit taking and then market information.”
Speaking further, Eze argued that since the market has a self-adjusting mechanism, there may be a gradual return of. “The thing about a market scenario is that there is a level the bears will have an upper hand in the market and since the market has a self adjusting mechanism, so when that mechanism sets in, the bulls will come back.
Corroborating, Chief Executive Officer, Cowry Asset Limited, Johnson Chukwu pointed out that investors decided to lock in on their capital gain because their dividend expectations were not met.
“It was because the dividend expectation of investors particularly those who were investing in the dividend income was not being met, that was why some of them re-treated their position. The best dividend yield we have seen so far is from Zenith Bank, their dividend is close to 9 per cent, the rest are dividend yield of 5-6 per cent and it is well known that other fixed income instruments are returning far more than that.”
“So for an investor that went in seeking for dividend income, if they went in earlier, they would have achieved their capital gain threshold, so what happened was that they were taking profit because their expectation was not met so they decided to lock in on their capital gain.” Hinting on the outlook of the market, Chukwu said, “The market will remain choppy till the benefit season is out. If there is an important information attaining to them, people will go in and begin to take advantage of it or when results come and they did not meet their expectations, one should expect to see this choppy movement throughout the benefit season.”
