NSE: Sell-off persists as market cap dips by N56bn in 2 days

By Chinwendu Obienyi

Transactions on the Lagos floor of the Nigerian Stock Exchange (NSE) recorded another negative outing as losses in high and medium capitalised stocks led to investors’ wealth declining by N56 billion in two consecutive trading sessions.
Price depreciation in the shares of Stanbic, Nigerian Breweries and Zenith Bank had pushed the NSE All Share Index (ASI) down by 0.19 per cent to close at 40,494.35 points while investors lost N41 billion as market capitalisation closed at N21.184 trillion on Tuesday.
Analysts had said fixed income yields would moderate demand for Nigerian stocks and true to their assertion, sell-offs in the shares of BUA Cement, Access Bank and BetaGlass drove the ASI down by 0.07 per cent to close at 40,465.32 points while market capitalisation dropped N15 billion to close Wednesday’s session at N21.169 trillion. This means investors have lost N56 billion in two consecutive trading sessions.
Further analysis of the market’s performance showed that the volume and value of stocks traded declined by 31.5 and 54.0 per cent respectively to 244.20 million units and N2.65 billion, exchanged in 4,083 deals.
Commenting, market analysts at Cordros securities said they feel that the recent hawkish decision provided at the January MPC meeting has come to terms with the fact that attracting portfolio investments is crucial in easing the liquidity constraints in the FX market.
They added that with bearish sentiment dominating the market, domestic investors are increasingly worried about the changing dynamics in the yield environment.
“We expect dividends announcements that will accompany 2020 FY earnings released to support market performance in the short term. Notwithstanding, there is the possibility that increasing fixed income yields will temper demand for stocks, as investors scale down their positions in anticipation of higher yields in the FI market amidst the unimpressive macro story”, they said.

For its part, Afrinvest, said, “We believe bargain hunting would boost the performance of the market this week as prices remain attractive”.  Meanwhile, 22 stocks depreciated in value while 18 others appreciated. BetaGlass topped the losers’ chart with 9.75 per cent to close at N50 per share, Japaul Gold followed with 8.86 per cent to close at 0.72 kobo, Fidson fell by 8.55 per cent to close at N5.35, Chip Plc dropped 7.89 per cent to close at 0.35 kobo while Vitafoam decreased by 7.56 per cent to close at N7.95.
On the other hand, Julius Berger led the gainers’ chart with 9.73 per cent to close at N20.30 per share. LivingTrust was next with 9.68 per cent to close at 0.68 kobo, Honeywell Flour gained 9.60 per cent to close at N1.37, Cornerstone increased by 9.26 per cent to close at 0.59 kobo while UPDCreit garnered 7.41 per cent to close at N5.80.