Published On: Sun, Feb 11th, 2018

Investors lose billions as market tumbles

FELIX OLOYEDE

A plunging equity market has left investors on the Nigerian Stock market languishing in pain as the market slipped by thundering -3.39 per cent last week, mirroring recent developments in major European and American markets over the last two weeks. In contrast to the bullish market of a month ago traders in growing numbers are heading for the door as they engage in massive sell offs.

The Nigerian Stock Exchange

The All Share Index shed -0.46 per cent on Friday alone as it closed at 43,127.92 points, causing investors a loss of N554.98 billion in the turbulent week with market capitalization dipping -3.46 per cent to N15.48 trillion from N16.02 trillion the previous week. The market capitalization shrank by N71.40 billion by the weekend.

A decline in the share prices of medium and large capitalized stocks were largely responsible for the week’s bearish run with Nestle leading 32 losers. The stock was down -N12.80, representing a -0.93 per cent loss to end the week at N1360.00, closely followed by Zenith Bank, which dropped -N1.10 to end the week at N30.90 while GT Bank lost –N1.00 to berth at N48.00.

“I see it as market correction. Investors’ confidence is not affected in any way. Profit-taking by institutional and retail investors have simply dragged the market down this week,” said Moses Ojo, analyst, Panafrican Capital Plc in a telephone conversation with Business Hallmark. He added that the Nigerian bourse followed global market trends as the US market slumped 6 per cent, its worst week in seven years.

“What is happening at the global market is not yet clear, because the traditional drivers of global economic growth, the developing and emerging markets are equally showing some signs of weakness such as China, India and a few other countries in south-east Asia.  The global market is engaging in some correction,” he further explained.

Bloomberg reports that the Stoxx Europe 600 Index recorded its worst week since 2016, eroding almost half a year’s gains. China’s benchmark fell the most in almost two years earlier, while the MSCI World Index is set for its biggest weekly drop since 2011. A measure of U.S. bond-market volatility soared, as core European bond yields dropped.

 

The Nigerian capital market has achieved 12.77 per cent year-to-date return and has grew 69.31 per cent in the last one year, ending 2017 with 42 per cent appreciation, which made it the 11th best performed market globally last year.

The staple macroeconomic  indexes and foreign exchange market buoyed the rally which the market witness in January, it is usual for investors to take profit after such bullish trend, Omoefe Eromosele, research analyst, Afrinvest (W/A) Ltd told Business. “The current bearish run would subside by next week as companies begin to release their full year results, which we believe would be positive following last year’s stable economy. Investors would come in with the hope of taking dividends,” she posited.

The market would make a turn week when investors begin to position themselves in the bid the take dividends from organisations that would declare the 2017 financial results, claimed AyobamiAjayi, research analyst, EDC Securities Ltd. He added that many of the portfolio investors would be targeting banks and consumer goods companies.

“Strong corporate earnings: As at September 2017, the earnings of the banks, consumer goods, cement, and agriculture companies under our coverage were higher by 12.4%, 141%, 103%, and 5% respectively compared with same period of 2016. This scenario assumes that corporate earnings growth will surpass 2017 rate under strong economic growth, significant improvement in forex availability for businesses, and low interest rate conditions. Significant earnings growth will address the current investors’ concerns about high equity valuations following last year’s bull run,” Cordros Securities claimed in its 2018 Nigerian equity market outlook.

Source: NSE/Bloomberg/Business Hallmark

Unilever appreciated 3.89 per cent to N49.45 to top the 23 gainers list on Friday with Dangote Cement (N266.70) and Julius Berger (N27.30) also rising 0.64 per cent and 4.8 per cent respectively. The prices of 50 companies were flat on the last trading day of the week.

The financial sector was largely responsible for the 552,391,115 stocks valued N4.49 billion traded in 5,489 deals. Skye Bank, the most active stock accounted for 27 per cent of the total volume with investors selling 149,581,385 the bank’s shares worth N155.95 million. FBN Holdings (51,846,936 shares valued at N631.17 million), Diamond Bank (37,613,482 worth N107.46 million) and FCMB (36,933,979 priced N101.90 million) also had significant impact on the volume of transactions that got place on Friday.

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