Posted by Nkiruka Anene, Lagos on
The free fall in the prices of quoted companies in the Nigerian Stock Exchange (NSE) which has refused to yield to corrective measures took a dramatic turn yesterday with the value of listed equities dropping by a record N301 billion.
The free fall in the prices of quoted companies in the Nigerian Stock Exchange (NSE) which has refused to yield to corrective measures took a dramatic turn yesterday with the value of listed equities dropping by a record N301 billion.
Specifically, the market capitalization which measures the value of all listed equities declined to N8.226 trillion from the previous day's N8.527 trillion, representing 3.5 per cent decrease.
The All Share Index of the NSE, another key indicator of the market, dropped by 1,371.36 points from 38,869.32 to 37,497.96 points, also representing 3.5 per cent decline.
Market watchers attributed the free fall to the removal of the one per cent ceiling on share price depreciation effected about two days ago. The NSE had on Tuesday reversed the one per cent benchmark for downward movement of share prices derisively tagged 'circuit breaker' in the hope that it would allow share prices to bottom out fast and rekindle investors' confidence in the market.
Stockbrokers had contended that the one per cent ceiling on downward price movement had been hindering the recovery in the market, by forcing investors to keep waiting for the day when share prices would reach their equilibrium. However, the NSE recently expressed fears that the persistent depreciation of share prices in the market was an invitation to foreign investors to stage a hostile take-over of the quoted companies whose share prices were in unabated depreciation.
The assistant director-general of the NSE, Mr. Lance Musa Elakama had warned in an AIT programme that there was urgent need for intervention in the market to halt the free fall of share prices if hostile take-overs by foreign investors must be averted.
The NSE has lost about N4 trillion in the last seven months since the relentless share price depreciation commenced in March 15, 2008. While stock markets in the U.S., Europe and Asia have shown remarkable recovery in response to the bail out plans by the various governments, the financial meltdown in the NSE has persisted.
The massive losses in the share prices of 73 companies led by Chevron which lost N19.11 to close at N363.19 contributed to the sharp decline recorded yesterday.
Oando plc followed on the price losers' chart, dropping by N7.68 to close at N146.11. Conoil, Guinness, and Flourmills followed with drop of N4.98, N4.85 and N3.15 to close at N94.63, N92.25 and N59.91 respectively.
On the contrary, three stocks appreciated in price led by FTN Cocoa with price gain of N0.09 to close at N2.00, followed by Bagco and Omatek that appreciated by N0.07 apiece to close at N3.72 and N2.00 respectively.
The banking sub-sector recorded the highest level of transaction, accounting for 73.3 million shares worth N821.61 million exchanged in 2,937 deals. Spring Bank emerged the most active with 33.08 million shares valued at N184.96 million done in 128 deals.
The insurance sub-sector trailed with traded volume of 14.3 million shares valued at N28.56 million in 304 deals.
In all, investors bought 165.8 million shares worth N1.48 billion exchanged in 5,110 deals.