Election fever high on market as equities gain N21bn

Chinwendu Obienyi

Trading sentiments on the floor of the Nigerian Stock Exchange (NSE) remained mixed as investors reacted to the Central Bank of Nigeria (CBN)’s stance that it was reviewing information provided by the MTN and four banks it fined over a dispute on the repatriation of dividends.

As a result, the All-Share Index (ASI) closed the week on a positive note, appreciating by 59.28 absolute points or 0.18 per cent to close a 32,540.17 points.

Also, investors gained N21 billion in two consecutive trading sessions even as market capitalization picked up the pace to close at N11.879 trillion after closing at N11.819 trillion on Wednesday 19, 2018.

Accordingly, the Month-to-Date and Year-to-Date losses moderated to 6.79 and 15.07 per cent respectively.

The shares of Africa’s telecommunication company rose by five per cent on Thursday 20, 2018
and according to Reuters, there are some talks going on as the market welcomed the less harsh tone by the CBN.

Speaking, Telecoms analyst, Avior Capital Markets, Ruhan Du Plessis, said: “It is looking more likely that MTN will not have to pay back the amount after all as the market feared. The market has welcomed the progress.”

The CBN had on August 29, 2018 said it had ordered MTN and the four banks to bring $8.1 billion back into Nigeria that it alleged the telecoms firm sent abroad in breach of foreign exchange regulations.

Consequently, the Industrial Goods (+2.44 per cent) index posted the largest gain, following investor interest in WAPCO (+9.90 per cent) shares, while demand for the shares of Unity Bank (+9.09 per cent) and PZ (+8 per cent) led to positive returns in the Banking (+0.66 per cent) and Consumer Goods (+0.16 per cent) indices respectively.

On the flip side, the Oil & Gas (-0.29 per cent) and Insurance (-0.27 per cent) indices closed negative, owing to sell pressure in Forte oil (-4.44 per cent) and PRESTIGE (-5.36 per cent) stocks.

Market breadth remained positive as 23 stocks posted gains while 15 others declined. Jaiz Bank topped the gainers’ chart with 9.80 per cent to close at 0.56 kobo per share. Unity Bank was next with 9.09 per cent to close at 0.96 kobo, First Aluminum increased by 8.82 per cent to close at 0.37 kobo, Wapic garnered 8.11 per cent to close at 0.40 kobo while PZ gained eight per cent to close at
N13.50.

On the other hand, Mansard topped the losers’ chart with a loss of 9.71 per cent to close at N1.86.
Lasaco followed with 6.06 per cent to close at 0.31 kobo, Prestige fell by 5.36 per cent to close at 0.56 kobo, Wema bank depreciated by five per cent to close at 0.57 kobo.

Analysts said that trading would be cautious and that investors would continue to remain uncertain due to the political jitters, as such downside risk in buying of stocks is expected to happen.

They, however, warned politicians to guard their comments, adding that their unrestrained utterances are heating up the polity with dire consequences as a whole and the capital market in particular.

The Association of Stock-broking Houses of Nigeria (ASHON) in a statement made available to Sunday Sun noted that uncertainties and all sorts of insecurities that currently pervade the country affect investors’ sentiments, asset valuations, market and country risk profile and portfolio allocation decisions.

According to the statement, bad news trigger market panic and investors over-react to such news and the country’s economic barometers, the securities markets in Nigeria have continued to reflect investors’ apprehensions to instability in the political and economic landscape through all their indices.

This, it said, has largely accounted for the inability of the market to fully recover from the effects of the 2008 financial crisis, notwithstanding the efforts made by the regulators and operators to fully revive the market, adding that the current situation could spell doom if the trend continues.

However, the Chief Executive Officer, Frontvine Securities, Chief Eugene Ezenwa, told Sunday Sun that the market is going through a period of volatility, adding that as soon as the political fever douses, investors would return to the market.

“The volatility of the market is so apparent now that the upward trend is quickly matched with downward trend because of profit takers. Secondly, the election fever is affecting the market, our election here in Nigeria is marred with high tension unlike what we see in the United States of America in the sense that it is very difficult to determine who wins the election at the end of the
day.

“This affects the market because the market is driven by information and predictions. Investors are very apprehensive and that is why when the tension douses, the market then do not have any limit than to reverse to its upward trend,” Ezenwa said.