Political waves, paucity of MTN shares shake stock market

Chinwendu Obienyi

In what would have been a perfect week for the Nigerian stock market, investors’ sentiment weakened during Friday’s session due to the hostile political environment in the country, the exit of Theresa May as British Prime Minister, as well as the low supply of MTNN’s shares on the floor of the Nigerian Stock Exchange (NSE).

Activities had resumed the week on a positive note as the All Share Index (ASI) appreciated by 1.74 per cent to 29,373.40 points, driven by the bullish run in the shares of MTNN.

The Month-to-Date return grew to 0.73 per cent while the Year-to-Date loss moderated to 6.54 per cent while the market capitalisation closed at N12.937 trillion.

Tuesday’s session at the domestic bourse also closed negative as buying interest in the shares of MTNN, Dangote Cement and GT Bank drove the ASI northwards by 2.88 per cent to 30,218.14 points, above the psychological benchmark of 30,000.00 points, thus sustaining the bullish streak of the equities market.

Consequently, YTD loss moderated to -3.9 per cent while market capitalisation of the Nigerian Stock Exchange increased by N372.1 billion to settle at N13.309 trillion from N12.937 trillion recorded on Monday.

Amid stronger interest in the shares of MTNN and Dangote Cement, the Nigerian equities market sustained its bullish run for the fifth consecutive session as the All Share Index (ASI) gained 3.07 per cent – the largest gain since December 2018, to 31,145.15 points on Wednesday.

The market capitalisation increased by N408.3 billion to settle at N13.717 trillion while YTD loss improved to -0.9 per cent from -3.9 per cent recorded in the previous session.

Thursday’s session was not any different as the benchmark index rose by 1.07 per cent to 31,477.51 points, driven by gains in bellwether stocks with the Month-to-Date and the Year-to-Date returns growing to 7.91 and 0.15 per cent respectively.

Friday, however, saw the bears take over the market as the ASI declined by 1.89 per cent to close at 30,881.29 points while market capitalisation closed the week at N13.601 trillion due to the back seat taken by investors in the shares of Dangote Cement and MTNN.

At the close of trading on Friday, 21 stocks gained while 17 others declined. ETI topped the gainers’ chart with 9.84 per cent to close at N10.05 per share, Fidson followed with 9.78 per cent to close at N5.05, Fidelity Bank rose by 9.70 per cent to close at N1.81, Japaul oil increased by 8.33 per cent to close at 0.26 kobo while ABC Transport garnered 7.69 per cent to close at 0.28 kobo.

On the flipside, Neimeth topped the losers’ chart with 8.93 per cent to close at 0.51 kobo per share. Chip Plc was next with 8 per cent to close at 0.23 kobo, Academy fell by 7.41 per cent to close at 0.25 kobo, MTNN lost 6.04 per cent to close at N140 while Nigerian Breweries decreased by 6 per cent to close at N58.

Analysts say the reversal was due to the hostile political environment, Theresa May’s exit as the Prime Minister and the low supply of MTN’s shares.

Theresa May finally announced her resignation after years of Brexit gridlock in a move that hurls Britain into fresh chaos.

The embattled Prime Minister choked with emotion, caved to a Tory mutiny in a bombshell statement outside 10 Downing Street.

Speaking to Sunday Sun via telephone, Nona Awo, an analyst said that although the market performed well in over six trading sessions, the reversal in the market is down to the low supply of MTN shares.

“Shares of MTN has been in low supply since its listing…so when this happens, investors tend to react negatively, hence the bears returning to the market on Friday.”

Also reacting, Founder of Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu, described the listing as dissatisfactory.

“Our conclusion as shareholders is that they have come to play us a game which is not far from a fraudulent game; the nominal value of MTN shares is not certain.

“Up until now, no prospective shareholder can tell you this is what MTN Nigeria stands for,” Nwosu said.

He said that the exchange set a bad precedence in the market by allowing some companies to list without meeting the free float requirement.

“Whenever any company wants to come for listing by introduction, that free float which they have agreed with, must be open and for the investing public.

“Let everyone scramble and get from that, and not a situation where you will be listed by introduction and the shares are not available,” Nwosu said.