NSE’s Value of Trading Declines by 45%

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By Goddy Egene

The stock market witnessed a decline in value of investment by investors last week, committing only N7.436 billion as against N13.453 billion invested the previous week, showing a fall of 44.7 per cent.

The weak patronage led to a depreciation of 0.08 per cent in the Nigerian Stock Exchange (NSE) All-Share Index by 0.08 per cent to close the week at 24,287.66, while market capitalisation ended at N12.670 trillion respectively.

Market analysts attributed the lower value of trading to the cautious stance of investors, who are waiting for companies to release their half year financial results.

Some market analysts had said the financial performance of companies for first half of the year will determine the level of patronage by investors going forward.

Although many investors are adopting cautious trading, operators have advised discerning ones to take advantage of the current low prices and increase their investments in the market.

For instance, a stockbroker, Mr. Ayo Oguntayo, explained that some stocks have suffered significant price depreciation in the last month of the Q2 due to profit taking after a rally in April and May.

“Just like the scenario that occurred after the decline in Q1 when investors swooped on shares due to their low prices, the decline in June has provided an opportunity for discerning investors to come in ahead of the release of H1 financial performance of companies. “Although there are some apprehension that the COVID-19 pandemic may have impact on the results, there are possibilities of some companies still coming up with positive results because many of them activated their business continuity plan that helped to mitigate the negative impact of the lockdown,” Oguntayo said.

Speaking in the same, the Chief Executive Officer of Wyoming Capital and Partners, Mr. Tajudeen Olayinka, said now that market has had a better understanding of the COVID-19 pandemic, and the fact that everyone has got to live with the virus going forward, it was unlikely that market would go through a repeat of the experience we had at the start of the pandemic.

“However, market needs to analyse H1 results that are being awaited, to determine the impact of the pandemic on listed companies, before taking further investment decisions or charting a way forward.

“More importantly, how the various measures put in place by government would impact the economy as a whole. On a balance of probability, we may see a better market in H2 2020,” Olayinka said
As investors wait the H1 results, the Director General of the Securities and Exchange Commission, SEC, Mr. Lamido Yuguda has pledged the determination of the current management of the commission to make the capital market more accessible to Nigerians.

“We need to make operations in the capital market as easy as possible, that way we can attract investments. We are aware that some investors have left their money due to the Herculean procedures involved, hence our desire to ensure that people are able to benefit from investments, with that, we can increase investor confidence.

“We will look at the processes involved and streamline them to ensure that investors are able to get their money without much difficulties.

“When that happens people can be motivated to come back to the market. Unless we are able to attract people back, we cannot get the capital market that we can be proud of. We should make our local individual investors the key to succeed in our quest to rebound the market. Local investors don’t have anywhere to go to, and as long as they trust us, they will remain.”

According to him, commission has zero tolerance for sharp practices in the capital market and urged stakeholders to ensure that they operate according to laid down rules and regulations.

“We will not condone sharp practices in the market, we will ensure that everyone plays by the rules as that is one of the ways we can attract these investors. Investors need to be protected, once we can do that, we will be able to take our market to greater heights,” Yuguda said.

Meanwhile, out of the 1.016 billion traded last week, the Financial Services industry accounted for 784.322 million shares valued at N3.305 billion traded in 10,592 deals. Thus, the sector contributed 77.23 per cent and 44.45 per cent to the total equity turnover volume and value respectively. The Oil and Gas industry followed with 61.822 million shares worth N418.191 million in 984 deals. The Consumer Goods industry occupied the third place with a turnover of 42.999 million shares worth N1.102 billion in 2,848 deals.

Trading in the top three equities namely: Sterling Bank Plc, FCMB Holdings Plc and FBN Holdings Plc, accounted for 416.989 million shares worth N791.078 million in 2,752 deals, contributing 41.06 per cent and 10.64 per cent to the total equity turnover volume and value respectively.

In the exchange traded products sector, a total of 106,450 units valued at N117.642 million were traded in four deals, compared with a total of 301,094 units valued at N2.384 billion transacted two weeks ago in 14 deal.

A total of 2,408 units of bonds valued at N2.614 million were traded in nine deals compared with a total of 11,487 units valued at N14.769 million transacted the previous week in 13 deals.

The price movement chart showed that 26 equities appreciated in price during the week, higher than 25 equities in the previous week, while 36 equities depreciated in price, higher than 33 equities in the previous week.