Investors Lose N146.2bn to Massive Sell-off

Equity performance on the Nigerian Stock Exchange was negative for the most part of last week as the All Share Index (ASI) gained on three out of five trading days with the greatest year-to-date loss being the 22.1 per cent recorded last
Wednesday.

At the end of the transactions for the week, market capitalisation settled at N9.4trillion after investors lost N146.2billion, according to a survey by the investment and financial advisory firm, Afrinvest Research.

Meanwhile, reviews, by economic experts, of the 2016-2017 Medium Term Expenditure Framework (MTEF) and Fiscal Policy Strategy (FPS), which the federal government submitted to the National Assembly on Tuesday have suggested that the N2.22 trillion deficit earmarked in the budget may eventually rise on accounts of uncertainties in oil prices and government’s alternative income sources.

A report by the Afrinvest Research at the weekend, which was made available to THISDAY showed that the Organisation of Petroleum Exporting Countries’ unrelenting decision to further the oil glut, thus pushing the index to a 37-month low during the week, triggered an unprecedented sell offs across the bourse.

W-o-W performance of the benchmark index was a 1.3 per cent decline and YTD return closed at -21.3 per cent (vs. -20.3 per cent last Friday). In like manner, market capitalisation settled at N9.4trillion after investors lost N146.2billion during the period under review.
On the average, market activities weakened Week-on-Week as average volume declined 3.6 per cent to 234.8million and average value reduced 5.7 per cent to N2.8billion W-o-W.

All sector indices except the Oil & Gas index closed in the red W-o-W. The Banking index led sector decliners; closing 4.3 per cent lower on the back of depreciation in Zenith (-7.8 per cent) and GTB (-5.0 per cent). This was followed by the Industrial Goods sector which lost 1.3 per cent W-o-W as Dangote Cement (-0.7 per cent) and CCNN (+4.9 per cent) depreciated in value. Also, against the fall in Continental Reinsurance (-4.8 per cent) and Nem Insurance (-1.5 per cent) W-o-W, the Insurance sector waned 22bps. The Consumer Goods sector followed with 15bps.

According to Afrinvest Research, the W-o-W market breadth was 0.7x as 25 stocks rose while 35 stocks declined. The highest rising stocks for the week were Law Union (+21.8 per cent), Learn Africa (+18.2 per cent) and Eterna (+17.8 per cent) against Honey Flour (-11.6 per cent), Fidson  (-9.8 per cent) and Unity Bank (-9.5 per cent), which declined the most for the week.

Afrinvest said in its report that “While concerns about further decline in oil prices following OPEC’s decision and the looming Fed rate hike may further weaken sentiments in the week ahead, we believe that pockets of opportunities still exist in the equities market for end of the year bargain hunters.”

Nigerian Stock Market had ended the third quarter of the year in the negative territory as analysts, investors and market stakeholders expect an improvement in market situation while outlooks remain very high that situations will improve as general economic activities improve.

Market key benchmark indicator, NSE ASI, recorded -6.69per cent losses in Q3’15 to close the quarter bearish while further quarterly review of market performance reveals that the index recorded +5.39 per cent gains in Q2 2015 and -8.40 per cent loss in Q1 2015 while the +8.30 per cent gains recorded at the close of trading on 1st April 2015 remains a contributory factor that funded the positive outlook recorded in Q2.

A review of the monthly market performance by Proshare, a market intelligence firm, further reveals that the highest monthly gain (+9.33 per cent) was recorded in April 2015 while highest loss (-14.70 per cent) was recorded in January 2015 in the build-up to the 2015 general elections while the last month of the quarter closed positive with +5.16 per cent after it recorded four consecutive losses in previous months.

Meanwhile, experts have posited that budget 2016 deficit would increase as a result of the sustained dip in prices of oil at international market.

They fear that the government may in its attempt to fund the N2.22 trillion budget deficit, crowd out private investment from the economy, a situation they said would lead to more job losses considering government’s limited direct employment of labour.


SOURCE