ASHON Advises Investors against Panic Sale as Market Records Further Decline

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Goddy Egene

As prices of shares continue to dip at the stock with some hitting two-year low, the Association of Securities Dealing Houses of Nigeria (ASHON) has cautioned investors against panic sale of their securities, to avert losses.

The association insisted that the stock market would soon rebound.

The local bourse booked another decline for the third consecutive week as the Nigerian Stock Exchange (NSE) All-Share Index fell 2.27 per cent to close at 27,919.50, while market capitalisation ended at N13.922 trillion.  The market had depreciated by 2.41 per cent the previous week.

However, while some nervous and short term investors may be contemplating selling to exit the market due to the persistent bearish run, the Chairman of ASHON, Chief Patrick Ezeagu, has advised against panic sale of shares, saying the negative trend would soon be reversed.

The ASHON boss noted that two investors may not necessarily have the same motive for sale or buy order, saying this is where the need for professional investment advice from stockbrokers become compelling.

He stated that a trend analysis of corporate earnings in recent time indicates that many companies across sectors have posted higher earnings with good returns but this has not significantly reflected in the upward movement of their share prices. Ezeagu explained that there was nothing unusual about this as the market generally reflects the trend in the economy, hence, investors buy into the future of these companies on the expectation of higher shareholder value.

 

He said: “Those who are selling off their shares right now are speculators and not real investors. Every stock market needs speculators for liquidity but they can change investment decision in one second. Our stock market is forward looking. Investors need not be nervous. 

“They should consult professional stockbrokers for sound investment decision. There is no basis for panic sale of shares. Many companies have announced strong financial performance with prospects of increased future earnings. Why should a shareholder of such a company embark on panic sale of shares?

“Globally, stock market gauges the mood of the economy like a barometer. Our market is not a local one. Foreign investors have significant stakes because their analysis has always convinced them that our market has potential for strong Return on Investment (ROI). 

“At the moment, core investors are awaiting a couple of things, including announcement of ministers of the Federal Republic and the Economic Team to show the clear direction of the government. 

“These are issues that are beyond the council and  management of  the NSE but have dire consequences on investment decisions. The bearish trend has to do with the fact that the government is yet to settle down after the elections. However, astute and professionally guided investors should take position now that most stocks are trading lower than their net realisable asset value and expect handsome returns when the market shall eventually rally. 

A mere study of most of the companies’ performance figures is most informative and points in the direction of a market that will definitely rally as soon as the economic team of government is in place.”

 

Meanwhile, an analysis of the market performance, it started the week on a negative note, which was   sustained for four trading sessions, shedding 0.8 per cent, 0.5 per cent, 0.6 per cent and 0.6 per cent on Monday, Tuesday, Wednesday and Thursday respectively.  However, the market went up by 0.8 per cent on Friday. 

A look at the sectoral performance showed that five of them declined. The NSE Oil & Gas Index led with 5.7 per cent, trailed by the NSE Banking Index with 4.3 per cent. The NSE Insurance Index shed 3.8 per cent, while the NSE Industrial Goods Index went down by 0.01 per cent.

 

 Market turnover

Meanwhile, investors traded 1.086 billion shares worth N13.390 billion in 15,774 deals, compared with 988.491 million shares valued at N13.839 billion that exchanged hands the previous week in 16,414 deals. But the Financial Services industry led the activity chart with 829.468 million shares valued at N8.493 billion traded in 8,596 deals, thus contributing 76.4 per cent and 63.4 per cent to the total equity turnover volume and value respectively.

 The ICT Industry followed with 90.049 million shares worth N851.989 million in 658 deals. The third place was Conglomerates Industry with a turnover of 56.788 million shares worth N84.522 million in 731 deals.    Trading in the top three equities namely: FBN Holdings Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc, accounted for 420.921 million shares worth N5.516 billion in 3,430 deals, contributing 38.7 per cent and 41.2 per cent to the total equity turnover volume and value respectively.

There was no ETP traded during the week compared with 1,115 units valued at N165, 837 were executed in three deals two weeks ago. A total of 5,666 units of Federal Government Bonds valued at N5.847 billion were traded last week in 17 deals compared with a total of 756 units valued at N730,454.35 transacted the previous week seven deals.

Top price gainers and losers

The price movement chart showed that 15 equities appreciated in price during the week, lower than 18 in the previous week, while 52 equities depreciated in price, higher than 39 equities in the previous week.

LASACO Assurance Plc led the price gainers with 13.7 per cent, trailed by Abbey Mortgage Bank Plc and Cornerstone Insurance Plc with 10 per cent apiece. A.G Leventis Nigeria Plc with 6.6 per cent, while Dangote Sugar Refinery Plc appreciated by 6.1 per cent. Vitafoam Nigeria Plc and Sterling Bank Plc went up by 4.5 per cent and 3.1 per cent respectively, just as Nestle Nigeria Plc, Dangote Flour Mills Plc and FCMB Group Plc 2.0 per cent, 2.0 per cent, 1.9 per cent in that order.

Conversely, MCNichols Plc led the price losers with 18.1 per cent, trailed by Cement Company of Northern Nigeria Plc with 17.2 per cent. Courtville Business Solutions Plc went down by 16.6 per cent. Union Bank of Nigeria Plc shed 12.6 per cent, just as Nigerian Aviation Handling Company Plc depreciated by 11.6 per cent. Law Union & Rock Insurance Plc shed 11.3 per cent, while Flour Mills of Nigeria Plc with 11.1 per cent. Okomu Oil Palm Plc and Berger Paints Nigeria Plc dipped by 10 per cent each.