Chinwendu Obienyi

Listed equities ended the month of April in the negative territory, wrapping up a brutal month in which over N713 billion was wiped off the Nigeria’s stock market capitalisation.

According to the monthly statistics of the Nigerian Stock Exchange (NSE), for the month of April, analysis done by Daily Sun gathered that the equity market sustained bearish trend despite improved fundamentals as well as mixed results from quoted companies.

The report stated that the market capitalisation of listed equities opened at N11.672 trillion in April and closed at N10.959 trillion, while the NSE All-Share Index dropped from 31,04.42 basis points to 29,159.74 bps on Tuesday, April 30, 2019, the last trading day of the month.

Thus, total losses during the month rose to N713 billion with the Month-to-Date and the Year-to-Date losses closing at -6.06 per cent and -7.22 per cent respectively during the month under review.

As at Friday, May 10, 2019, extended sell pressures in Zenith Bank, GT Bank and Dangote Cement was responsible for the rout on the Nigerian local bourse which continued during the week as bearish sentiments were observed across all trading sessions. Thus, most listed stocks remained undervalued, trading near 1-year lows, driving the benchmark index down by 1.2 per cent week-on-week (W-o-W) to 28,847.81 points while YTD return settled at -8.2 per cent.

Indices on the nation’s bourse had closed Monday’s session (May 7)in the red with the All-Share Index (ASI) dropping 0.05 per cent and the market capitalisation closing at N10.973 trillion. Tuesday’s session saw the ASI declining by 0.35 per cent to settle at 29,096.41 points while market capitalisation fell by N38 billion to close at N10.935 trillion from an opening trading session of N10.979 trillion as at 8am on Monday.

By the close of the week, the cumulative loss extended to 121 basis points on the back of price depreciation in Seplat, GT Bank and UBA. 

Across sectors, performance was equally negative as all indices closed in the red W-o-W. The Oil & Gas index was the biggest loser, down 5.3 per cent due to losses in Seplat (-10.0 per cent) and Japaul Oil (-33.3 per cent). The Banking index trailed, falling 2.8 per cent as Zenith Bank (-4.8 per cent), GT Bank (-4.3 per cent) and UBA (-3.0 per cent) witnessed price depreciation. In the same vein, sell-offs in Mansard (-9.5 per cent), Goldinsure (-36.1 per cent), Dangote Cement (-0.6 per cent) and CCNN (-3.5 per cent) dragged the Insurance and Industrial Goods indices 1.7 and 0.8 per cent lower respectively. Also, the Consumer Goods index declined 0.2 per cent due to sell-offs in Nigerian Breweries (-1.1 per cent) and Dangote Sugar (-0.4 per cent). 

At the close of transactions on May 10, Investor sentiment as measured by market breadth (advance/decline ratio) softened to 0.4x from 0.7x recorded last Friday consequent on 18 stocks advancing against 47 that declined. 

The best performers for the week were Betaglass (+23.1 per cent), Courtville (+13.6 per cent) and NEM (+13.1 per cent) while Goldinsure (-36.1 per cent), Japaul Oil (-33.3 per cent) and Neimeth (-25.4 per cent) led the laggards.

The lack of clarity in terms of economic policy continues to hurt investors’ sentiment as most traders were unsure of the policy path.

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Still, foreign reserves grew to over $44 billion during the month of April amid 30 per cent surged in global oil prices, yet activities in the oil & gas sector of the NSE remained flat throughout the month.

Market experts believe more is needed on policy position to boost participation and sustain investments into the capital market.

Speaking to Daily Sun via telephone, Managing Director, Crane Securities, Mike Ezeh, noted that the economic situation of the country is reflecting badly on the nation’s capital market and as a result, foreign investors are dumping their shares irrespective of the earnings from quoted companies.

His words, “This is currently a market trend which means as an emerging market, we can either go up today or down tomorrow. Even the Asian markets are not left out as you find out that they nose-dive to such a point that investors withdraw their investments and the market will be in the red for a long time. That apart, the notion now is that the Nigerian economy is not doing well and the government about it is not doing anything about it. 

Foreigners are dumping their shares and once they do that, there is every tendency for the bears to strengthen its hold. all investments of returns and results from companies, banks have been positive, albeit mixed, yet this is not changing the trend at the stock market. The economy is worried and government is not doing or saying anything about economic development, hence the negative indices in the market”.

According to him, The Nigerian market remains an attractive one for investors, and it is expected that foreigners will withdraw their investment gradually unless there are policies that will trigger the bulls returning.

At a recent dinner organised by the Chartered Institute of Stockbrokers (CIS) in honour of the past presidents in Lagos recently, experts identified critical issues that should be addressed for prompt rebound. 

They underscored the need to intensify advocacy in order to draw the government and  other regulators’ attention to the benefits of investment through the capital market.

Speaking during the event, Chairman,NASD Plc, Tola Mobolurin, explained that the crash of Nigeria’s stock market from 2007-2008 was largely due to complacency of the government, capital market regulators, stockbrokers and investors.

Mobolurin  who is also the Vice Chairman of Capital Bancorp Plc, noted that if each stakeholder had played by the rules of the game, there would not have been laxity that led to regulatory failures with attendant market crash in the past. He however, expressed optimism that the market can bounce back if the entire financial system is overhauled without further delay.

“We must create savings institutions immediately as we are in dire need of Private Equity Fund and Hedge Fund In Naira in the National interest. We need institutions that have deep pockets and there should be an end to dichotomy between banks with capital market operations and banks with non-capital market operations. We must reactivate the bond market which we pushed away because of lack of interest as a thriving capital market is needed to build the economy.” Mobolurin said.