After Record Loss, Nigeria’s Equities Market Rebounds

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Investors in the Nigerian equities market witnessed the largest single daily loss since the beginning of 2019 after Nigeria’s presidential election with All Share Index dipping by 1.63per cent on the last trading in the election month. However, the trend may be short-lived as the market recorded a gain on Friday, the first day of trading in March, reports Bamidele Famoofo

The four business days that followed the presidential elections in Nigeria won’t be forgotten in a jiffy by investors in the Nigerian equities market as a big drop recorded in market capitalisation and All Share Index also translated to a big loss for them.

Market capitalization dropped from about N12.194trillion on Monday, 25th February to about N11.829trillion on Thursday same week, representing N365billion loss in investors’ equities portfolio.

The NSE-All Share Index (ASI), which tracks performance of stocks listed on the platform of the Nigerian Stock Exchange (NSE) as a result of sell-offs by investors declined from 32,700.12 points to 31,721.76 points on the last trading day in the month of February.

A report from Cordros Capital Limited on how the market fared in the review period indicated that the drop in ASI on the last day in February was the largest single day decline recorded in the market so far in 2019 as it attributed the loss to sell-offs across bellwether stocks in the equities market.

“Against marked sell-offs across bellwether stocks, the Nigerian equities market closed the last session of the month on a negative note as the ASI dipped by 1.63% — largest single day decline since Jan 31, 2019 — to 31,718.70 points”, the report disclosed in part.

As a result of the performance in the last four days in February, Month-to-date returns moderated to 3.80 percent while Year-to-date stood at 0.92 percent, according to Cordros Capital.

It was a all round loss especially on Thursday, February 28, 2019 with Banking sector index closing negative to the tune of -4.56 percent, meaning that investors who hold bank shareslost about five percent of value of their stock in that sector for the day. Equally, investors in the Industrial Goods sector shed -2.18 percent of value on the same day. Others are Consumer Goods (-2.02%), Oil & Gas (-1.56%), and Insurance (-0.97%). Notable stocks include, GUARANTY (-6.85%), WAPCO (-0.39%), NB (-4.45%), OANDO (-9.92%), and AIICO (-5.19%), respectively.

Meanwhile, experts have assured investors in the market that the fundamentals for recovery remain strong medium to long term even while the market continues to digest election results.

“As the market continues to digest election results, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuations remain supportive of recovery in the mid-to-long term”, Cordros Capital said.

Meanwhile, the month of February could not be labeled a period of doom for investors as it ended on a positive note overall as ASI appreciated by 3.8 percent to close on Thursday at 31,721.76 points compared to 30,557.20 points which opened the second month of the year.

Also, compared with the performance in January when ASI closed on a declining note, investors amassed N434billion from trading as market capitalization moved up from N11.395 trillion in January to close at N11.829 trillion on February 28, 2019.

As earlier reported by THISDAY, the market had recorded a decline in January as general elections jitters kept most investors away from the market. However, investors increased their patronage in February as they anticipated the release of corporate results for the year ended December 2018. Also, some investors felt the political uncertainties were reducing. Hence, the market appreciated in the month of February.

Besides, the growth would have been higher but for the decline recorded in the last two days of the month after the results of the presidential election were announced and President Muhammadu Buhari declared the winner.

The NSE ASI had appreciated to a high of 32,700.12, while market capitalisation rose to N12.194 trillion on Monday. However, the NSE ASI closed the month at 31,721.76, while market capitalisation ended at N11.829 trillion.

A review of the performance of the equities market a week penultimate the elections showed that the NSE All-Share Index and market capitalisation depreciated by 0.61 percent to close the week at 32,515.52 and N12.126 trillion respectively.

Breakdown of performance in the week showed that a total turnover of 1.481 billion shares worth N17.647 billion in 20,449 deals were traded by investors on the floor of the Exchange in contrast to a total of 2.834 billion shares valued at N28.138 billion that exchanged hands last week in 28,739 deals.

But contrary to the results, the week after the elections when all sectors recorded losses especially on the last day of the month of February, the Financial Services Industry (measured by volume) led the activity chart with 1.038 billion shares valued at N10.170 billion traded in 12,232 deals; thus contributing 70.07 percent and 57.63percent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 193.204 million shares worth N306.521 million in 1,330 deals. The third place was Consumer Goods Industry with a turnover of 72.042 million shares worth N4.381 billion in 2,990 deals.

However, in line with the assurances from experts, the market on Friday, March 1, the first day of trading in March, launched a recovery bid as ASI appreciated by 0.34 percent. Index value moved up to 31,827.24 while market capitalisation increased to N11.868 trillion having gained N40billion in one day.