Home Business Pressure on equities as investors lose N200 billion

Pressure on equities as investors lose N200 billion

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Sustained sell-offs in highly capitalised stocks trading on the floor of the Nigerian Stock Exchange (NSE) was the theme this week as investors lost a total of N200 billion Week-on-Week.

The equities market had suffered the previous week with N157 billion shaved off from the market capitalisation of the NSE and analysts who spoke with Sunday Sun noted that the downward trend experienced last week will continue unless there is an imminent positive catalyst that would change the situation of the market.

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Following the Federal Government’s declaration of Monday, August, 12 and Tuesday, 13, as public holidays to mark the Eid-el-Kabir celebrations, all Exchange’s facilities nationwide were closed for business to observe the holidays.

Trading activities resumed on Wednesday with the All Share Index (ASI) closing 0.82 per cent lower, to settle at 27,083.11 points, as price losses were recorded in the shares of MTNN, GT Bank and FBN Holdings.

As a result, the Year-to-Date (YtD) loss worsened to -13.8 per cent while market capitalization, which opened trading at N13.307 trillion fell to N13.198 trillion.

Activity level was mixed as volume traded rose 6.5 per cent to 235.11 million units while value traded declined 26.5 per cent to N3.29 billion in 3,922 deals.

Thursday’s session saw sell pressures in the shares of Dangote Cement, Stanbic and Unilever, which left the benchmark index in the negative territory as the ASI edged 0.11 per cent lower to settle at 27,052.93 points while YtD loss worsened to -13.9 per cent.

Consequently, investors lost N15 billion as market capitalisation settled at 13.183 trillion.

However, activity level was mixed as volume traded declined 0.8 per cent to 233.19 million units while value traded rose 10.5 per cent to N3.6 billion respectively in 4,331 deals.

It was gathered that the benchmark index remained in the red zone, down 0.63 per cent last week while market capitalisation was standing at N13.086 trillion. This represents a total of N221 billion lost in three consecutive sessions.

As at August 15, 1 of 6 indices posted gains while sector performance remained bearish. Leading the laggards, the Consumer Goods index lost 1.1 per cent following losses in Unilever (-10.0 per cent). Similarly, the Banking and Insurance indices lost 0.9 per cent apiece due to sell-offs in Wapic (-7.7 per cent) as well as Stanbic IBTC (-10.0 per cent).

Trailing, the Industrial Goods index declined 0.2 per cent on the back of sell pressures in MTNN (-4.1 per cent). In contrast, the AFR-ICT index, bouyed by gains in MTNN (+4.5 per cent) climbed 2.5 per cent higher while the Oil & Gas index closed flat.

ETI led 22 other stocks on the losers’ chart with a 10 per cent loss to close at N6.30 per share. Unilever followed with 10 per cent to close at N28.80, Redstarex lost 9.98 per cent to close at N4.24, Stanbic trailed by 9.97 per cent to close at N34.30 while custodian fell by 9.68 per cent to close at N5.60.

On the flipside, CCNN topped the gainers’ chart with 9.43 per cent to close at N14.50 per share. Unity Bank was next with 7.81 per cent to close at 0.69 kobo, Livestock feeds increased by 7.32 per cent to close at 0.44 kobo, Jaiz Bank rose by 5.41 per cent to close at 0.39 kobo while MTNN garnered 4.45 per cent to close at N135.

Analysts who spoke to newsmen, said that the market is in need of friendly policies, adding that the sectors in the economy also need a major boost as its current situation is nothing to write home about.

Cordros Capital in their view said: “In the absence of a positive catalyst, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuation remain supportive of recovery in the long term”.

Equity Research Analyst, Cordros Securities, Mustapha Wahab, said: “The market has really been battered to the point where people are now afraid to put their money in shares. Our views in the equities market is very clear and it is until we see market friendly reforms and policy implementation by the Federal Government, that is when we will start to see some form of positive activity in the market.

But from where we are right now, the market is very cheap when compared with Nigeria’s PE with comparable countries which should have driven some activity in the market, but for the fact that the market wants to see policies put in place”.

Traders say that “in the absence of any major stimulus, we had expected the extant negative performance to conclude the week. Nonetheless, we see opportunities for bargain hunting in stocks with sound fundamentals”.

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