Stock Market Loses N283bn as Investors’ Appetite Dampens

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Goddy Egene

The stock market declined by 2.05 per cent last week as events in the capital market community dampened investors’ appetite. 

Although the market opened for only three days due to two days holiday declared by the federal government, some analysts said regulatory action against Oando Plc by the Securities and Exchange Commission (SEC) and the protest by some workers of the commission, opposing the expected return of its suspended director general, Mr. Mounir Gwarzo, impacted the market negatively.

Contrary to a growth of 0.61 per cent the previous week, the Nigerian Stock Exchange All-Share Index (NSE ASI) fell 2.05 per cent to close at 30,432.13, while market capitalisation shed N283.2 billion to close at N13.402 trillion.

At the beginning of the week on Monday, the local bourse depreciated by 0.45 per cent mostly on the back of losses by Seplat, Ecobank Transnational Incorporated,

When trading resumed on Thursday, sell pressure in Dangote Cement Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc depressed the index by 1.3 per cent. The bear run continued on Friday, leading to a decline of 0.31 per cent. As a result, the NSE ASI dipped by 2.05 per cent for the week.

Across the sectors tracked, the performance was negative throughout. The NSE Oil and Gas Index led the losers, falling by 5.1 per cent, trailed by the NSE Insurance Index with a decline of 4.0 per cent. The NSE Industrial Goods Index went down by 3.1 per cent, while the NSE Banking Index shed 3.1 per cent, just as the NSE Consumer Goods Index closed 1.2 per cent lower.

However, some market analysts said the sacking of the Group Chief Executive Officer of Oando Plc, Mr. Wale Tinubu and his deputy. Mr. Omamofe Boyo, following the release of the forensic audit of the company’s activities and the events that followed discouraged some investors from the market last week.

Following   the conclusion of investigations into the activities of Oando Plc, having received petitions from two shareholders in 2017, that the company was being mismanaged, SEC  barred Tinubu and Boyo  from being  directors in any public company for the next five years. The commission also directed board members found guilty of various infractions to resign.

SEC  also announced the constitution of an Interim Management Team (IMT) headed by Mr. Mutiu Sunmonu, to oversee the affairs of Oando Plc and conduct an Extra Ordinary General Meeting on or before July 1, 2019.

But Tinubu and Boyo got   an ex-parte motion  order from the  Federal High Court in Lagos presided over by Justice Mojisola Olatoregun restraining SEC from implementing the  directives contained in the outcome of the forensic audit.

The judge said the order to maintain the status quo would remain pending the determination of the motion on notice.

But SEC  requested the deployment of armed security personnel , who took over   Oando Plc’s  office in Lagos for days.

Assessing the situation, the Chief Research Officer, Investdata, Ambrose Omordion, said there was already a panicky mode, as investors watch developments in the market

   According to him, Oando’s decision to seek court protection on Monday, restraining the implementation of the SEC’s order, and the appointment of Mutiu Sunmonu, as head of the Interim Management Committee without doubts, would further dampened investors’ confidence.

 Omordion explained that the market would remain volatile   in the absence of any catalyst that would impact positively on the market, and raise investor appetite for equity.

“However, we would like to reiterate our advice that investors should go for equity with intrinsic value. We advise investors to allow numbers to guide their decisions, while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.”

Market turnover

Meanwhile, market turnover fell significantly because it was a  brief trading week  following federal government’s  declaration of Tuesday and Wednesday  as  public holidays to mark the end of holy month of Ramadan and commemorate the Eid al-Fitr celebrations.

 Investors traded only 768.983 million shares worth N12.546 billion in 11,291 deals  last week, compared to 1.082 billion shares valued at N18.111 billion that exchanged hands  in 16,400 deals the previous week. 

 But the Financial Services Industry led the activity chart with 578.032 million shares valued at N7.384 billion traded in 5,934 deals, thus contributing 75.17 per cent and 58.85 per cent to the total equity turnover volume and value respectively. The Oil and Gas Industry followed with 55.229 million shares worth N1.486 billion in 1,111 deals. The third place was Conglomerates Industry with a turnover of 48.332 million shares worth N227.418 million in 470 deals.    Trading in the top three equities namely, Guaranty Trust Bank, United Bank for Africa Plc, and First City Monument Bank accounted for 329.929 million shares worth N5.341 billion in 1,427 deals, contributing 42.9 per cent and 42.57 per cent to the total equity turnover volume and value respectively.

There was no Exchange Traded Product (ETP) traded during the week. However a total of 290,130 units valued at N3.935 million were executed in 16 deals the preceding week.

A total of 23,941 units of Federal Government Bonds valued at N24.584 million were traded  last week in 26 deals compared with a total of 1,057 units valued at N1.060 million transacted two weeks ago week in seven deals.

Price gainers and losers

The price movement chart showed that 15 equities appreciated in price during the week, lower than 35 in the previous week, while 44 equities depreciated in price, higher than 24 equities of the previous week.

Champion Breweries Plc led the price gainers with 18.8 per cent trailed by Academy Press Plc, which garnered 8.0 per cent, while Livestock Feeds Plc went up by 6.7 per cent. NPF Microfinance Bank Plc gained 6.6 per cent, just as LASACO Assurance Plc and Sterling Bank Plc chalked up 6.6 per cent and 6.5 per cent in that order.

Conoil Plc, Access Bank Plc, AIICO Insurance Plc and FCMB Group Plc appreciated by 3.2 per cent, 3.0 per cent and 2.4 per cent respectively.

Conversely, NEM Insurance Plc led the price losers for the week, shedding 13.1 per cent, trailed by Capital Oil Plc with 13.0 per cent. Consolidated Hallmark Insurance Plc shed 13. 0 per cent as well, while Dangote Sugar Refinery Plc and Vitafoam Nigeria Plc went down by 12.8 per cent and 12.7 per cent in that order.

Japaul Oil & Maritime Services Plc shed 10.7 per cent, while Ecobank Transnational Incorporated, Thomas Wyatt Nigeria Plc and Glaxosmithklone Consumer Nigeria Plc declined by 10 per cent each.