Stock Market Sheds N547bn as Investors’ Appetite Remains Weak

Goddy Egene

The Nigerian equities market sustained its downward trend, recording the   largest single week decline since September 2018. Despite an increase in value and volume trading, the Nigerian Stock Exchange (NSE) depreciated by 4.6 per cent to close at 29,616.38, while market capitalisation shed N547 billion to close N11.124 trillion. 

Consequently, the year-to-date decline worsened to 5.8 per cent.  Investors ignored corporate results and dividends announced last week and intensified their sell-off of stocks following persistent negative sentiments.

The market closed in the red in four out of the five trading days just as sectoral indices tracked closed negatively. 

The NSE Consumer Goods Index led with 7.7 per cent, trailed by the NSE Industrial Index, with a decline of 6.4 per cent while the NSE Banking Index shed 6.1 per cent. The NSE Insurance Index depreciated by 3.8 per cent, just as the NSE Oil & Gas Index went down by 2.4 per cent.

Some market analysts continued to guide investors to trade cautiously in the short term.

For instance, analysts at Cordros Capital Limited 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 mid-to-long.”

However, analysts at Afrinvest West Africa said: “Despite the overall negative performance, we observed increased buying activity on bellwether stocks, and we expect this trend to be sustained in the coming week as investors seek to take position in attractively priced stocks.

“However, in the absence of major triggers that could drive positive sentiments, we maintain a bearish near-term outlook.”

A look at African major markets showed that only Nigeria and Ghana ended negatively.

Ghana’s GSE Composite Index fell 0.4 per cent to close the week. The Egypt’s EGX30 led gainers, up 4.0 per cent, followed by Morocco’s Casablanca MASI with 0.7 per cent and Mauritius’ SEMDEX index 0.6 per cent. The Kenya’s NSE-20 closed the week flattish.

In Asia and the Middle East, there was a bearish performance as four of five markets recorded losses. The United Arab Emirates’ ADX General Index emerged the lone gainer, rising 1.4 per cent. Conversely, the Turkey’s BIST 100 led decliners, reversing its strong performance the previous week as it went down by 6.3 per cent.

Saudi Arabia’s Tadawul ASI followed, falling 3.0 per cent, while Thailand’s SET Index shed 0.6 per cent and Qatar’s DSM 20 index closed 0.4 per cent lower.

But in the United States markets gained on renewed optimism over trade talks with China.

According to Afrinvest, the meeting between US President Donald Trump and China’s Vice Premier Liu renewed optimism on the possibility of a trade deal within four weeks.

“ Both sides have achieved new and substantive progress on issues of the trade agreement, but there are still major concerns (i.e. intellectual property theft and tariffs) that need to be addressed before any deal can be reached.

“Furthermore, US President Donald Trump has insisted on maintaining some of the tariffs placed on Chinese goods as leverage to ensure that China fulfils its obligation under the deal likely to be reached in the coming weeks,” it explained.

Based on the foregoing, the performance of developed markets was bullish across board. In the US markets, the S&P 500 and the NASDAQ closed the week 1.9 per cent and 2.7 per cent higher respectively. The UK FTSE appreciated  2.2 per cent while  France’s CAC 40  gained 2.3 per cent.  Germany’s XETRA DAX went up 4.1 per cent just as  Japan’s Nikkei 225 closed 2.8 per cent higher and  Hong Kong’s Hang Seng rose 3.0 per cent.

Also, across  the BRICS market, the performance was bullish as all indices  ended positively. The China Shanghai Composite led gainers, rising  5.0 per cent  following  the optimism on the progress of the US – China trade talks.  South Africa’s FTSE/JSE All Share and Russia’s RTS  inched  higher  by 2.5 per cent  apiece. Brazil Ibovespa sustained gains from  the previous  week rising 1.1 per cent, while  India’s BSE Sens rose 0.5 per cent. 

Market Turnover

Meanwhile, a  total turnover of 3.544 billion shares worth N20.264 billion in 19,130 deals were traded last  week by investors, showing a jump compared to  2.629 billion shares valued at N12.794 billion that exchanged hands  the previous  week in 15,558 deals.  

The Financial Services Industry by volume led the activity chart with 3.060 billion shares valued at N14.469 billion traded in 11,738 deals, thus contributing 86.35 per cent and 71.4 per cent to the total equity turnover volume and value respectively. The Information Communication Technology Industry followed with 253.633 million shares worth N53.707 million in 277 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 65.499 million shares worth N4.356 billion in 2,732 deals.    Trading in the top three equities namely, Wema Bank Plc, Sterling Bank Plc and Chams Plc, accounted for 2.104 billion shares worth N2.026 billion in 965 deals.

No Exchange Traded Products (ETPs) traded during the week compared with a total of 85,775 units valued at N1.187 million that was transacted the previous week in 22 deals, while  a total of 18,042 units of Federal Government Bonds valued at N19.685 million were traded last  week in 24 deals compared with a total of 3,453 units valued at N3.565 million transacted two weeks ago in 24 deals.

Price Gainers and Losers

The bears dominated as 55 equities depreciated in price, higher 36 equities of the previous week while 14  equities appreciated in price during the week, lower than  21 in the previous week.  Eterna Plc led the price losers with 24.5 per cent, trailed by Union Diagnostic & Clinical Services Plc with 23.3 per cent. United Bank for Africa Plc shed 19.4 per cent just as Beta Glass Plc, Neimeth International Pharmaceuticals Plc and Dangote Flour Mills Plc lsot 17.7 per cent and 16.8 per cent respectively.

Other top price losers included: Livestock Feeds Plc (15.8 per cent); Cement Company of Northern Nigeria Plc (14.5 per cent); Oando Plc (12.3 per cent) and  Ecobank Transnational Incorporated (12.2 per cent).

On the positive side, Ikeja Hotel Plc led the price gainers with 20. 2 per cent, trailed by Chams Plc with 20 per cent. Sovereign Trust Insurance Plc chalked up 15 per cent, while  First Aluminium Nigeria Plc appreciated by 10 per  cent. Berger Paints Nigeria Plc garnered 9.7 per cent, just as Thomas Wyatt Nigeria Plc inched up by 8.7 per cent.

Other top price gainers for the week were: Sterling Bank Plc (8.3 per cent); Union Bank of Nigeria Plc (5.2 per cent); Cadbury Nigeria Plc (5.0 per cent); and NEM Insurance Plc (4.9 per cent).

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