Investors jittery as losses rise to N1.31tr

July 23, 2019
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Many investors are in jitters as sustained losses depressed the share prices of most quoted companies to their lowest values in more than a year.

They suffered net capital depreciation of N315 billion last week, pushing the net average losses so far this year to N1.31 trillion.

Benchmark index at the Nigerian Stock Exchange (NSE) indicated average year-to-date return of -11.17 percent, 139.7 percent increase on average decline of -4.66 percent recorded by the first half of the year ended June 30. The stock market had traded negative in six of the seven past trading sessions, causing panicky investors to invoke open market orders and dump stocks at lower prices.

Checks at the weekend showed that most quoted companies are hitting new one-year low or trading around their lowest prices in the past one year. Several sectoral leaders, including Okomu Oil Palm, Presco, UAC of Nigeria, Julius Berger Nigeria, Stanbic IBTC Holdings, CAP, Total Nigeria, Transcorp Hotels, Nigerian Aviation Handling Company and PZ Cussons Nigeria closed at 52-week lowest prices. Other active stocks on the low included UACN Property Development Company, Eterna and MRS Oil Nigeria.

Despite the onset of the first-half earnings season, several large-cap and mid-cap stocks also closed around their lowest prices in a year, including NSE’s largest capitalised stock, Dangote Cement Plc and most capitalised financial institution, Guaranty Trust Bank.

Market-leading stocks around their one-year low included Zenith Bank, FBN Holdings, United Bank for Africa, Nestle Nigeria, Cadbury Nigeria, Transnational Corporation of Nigeria, Guinness Nigeria, Dangote Sugar Refinery, Flour Mills of Nigeria, Honeywell Flour Mills, Nascon Allied Industries, Fidelity Bank and United Capital.

The steep decline in shares prices among active large and mid-cap stocks had compounded the precarious market situation, which had seen about one-third of quoted companies stagnant around nominal values and unable to recover since the 2008 market crash.

The All Share Index (ASI)- the value-based benchmark index that tracks share prices at the NSE, declined by 2.27 percent to close weekend at 27,919.50 points as against the week’s opening index of 28,566.79 points. Aggregate market value of all quoted equities also declined from the week’s opening value of N13.922 trillion to close weekend at N13.607 trillion.

The ASI had opened 2019 at 31,430.50 points, 17.81 percent down from its 2018’s opening index of 38,243.19 points. Transactions at the NSE had dropped by 41.3 per cent to N937.8 billion in first half as investors rued macroeconomic uncertainties amid political risks and increased insecurity.

Total transactions at the Nigerian equities market stood at N937.79 billion during the first half of 2019, a decline of 41.3 percent or N659 billion from N1.597 trillion recorded in the corresponding period of 2018. The performance in first half 2019 however represented a marginal increase of 0.27 percent or N2.53 billion on N935.26 billion recorded in first half of 2017.

While most analysts agreed the current market situation presents good opportunity for long-term investors, most also remained cautious about the immediate to short-term outlook.

“In the coming week, we believe the bearish performance will be sustained despite attractive prices in fundamentally sound stocks as poor first half 2019 earnings results do little to spur investors’ interest,” Afrinvest Securities stated at the weekend.

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