Market index slumps further on economy’s negative sentiment

Cautious trading persisted on the equity sector of the Nigerian Stock Exchange (NSE), extending its losing streak for the fifth consecutive sessions in the first trading week of the month of July.

The prevailing negative sentiments may, however, be attributed to investors’ apathy on the economy, as players adopt the “wait-and-see” strategy due to assessed weak macro-economic trends and policy uncertainty.

Regrettably, expectations that the listing of the entire shares of Airtel Africa Plc on NSE would spur investors’ appetite for stocks was dashed at the weekend, following the postponement of the exercise on Friday.

This exercise was expected to result in an increased money flow this week as retail and other investors who could not participate in its book building process during the IPO would have acquired stakes in the group’s operations across 14 African countries, including Nigeria.

Specifically, at the close of transactions last week, the NSE All-share index and market capitalisation depreciated by 2.32 per cent to close the week at 29,270.95 and N12.902 trillion respectively.

Similarly, all other indices finished lower with the exception of the NSE Industrial Goods which appreciated by 3.28 per cent.

A breakdown of market activities last week showed that equity market resumed trading for the month on a bearish trend, following price losses suffered by most bluechip stocks, causing investors’ wealth plunge significantly by N156 billion on Monday.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Dangote Cement, Nigerian Breweries, Guaranty Trust Bank, Unilever Nigeria, and Ecobank Transnational Incorporated (ETI).
Following sell-offs in bellwether stocks, the bears maintained its dominance on Tuesday, as investors’ wealth plunged further by 0.74 per cent. The All Share Index (ASI) shed 219.47 absolute points, representing a dip of 0.74 per cent to close at 29,395.14 points. Similarly, the market capitalisation shed N93 billion to close at N12.957 trillion.

At the end of transactions on Thursday, the stock market sustained sliding profile, as more highcap stocks depreciated ion price, causing the Allshare index to slump further by 0.3 per cent.

The decline was largely impacted by value depreciation recorded in the shares of the following mid and large capitalised stocks, Presco, Guaranty Trust Bank, Guinness Nigeria, Dangote Flour Mills and Oando.

The Managing Director of Investdata Consulting, Ambrose Omodion said: “The monetary authority has earlier identified low national productivity as one of the major factors slowing down economic growth with recovery remaining slow fundamentals weak as reflected in the economic indices published by Central Bank of Nigeria (CBN) and National Bureau of Statistics.

“We expect volatility to continue as bargain hunters and traders to take advantage this pullback buy for half-year earnings reporting season that will kick off any moment in this July.

Further analysis of last weeks’ transactions showed that a turnover of 1.025 billion shares worth N9.911 billion were recorded in 19,375 deals by investors on the floor of the exchange in lower than a total of 1.771 billion shares valued at N28.036 billion that exchanged hands last week in 18,660 deals.

The financial services industry (measured by volume) led the activity chart with 660.844 million shares valued at N5.735 billion traded in 11,296 deals; thus contributing 64.49 per cent to the total equity turnover volume.

The Healthcare Industry followed with 95.150 million shares worth N61.699 million in 174 deals. The third place was Industrial Goods Industry with a turnover of 89.419 million shares worth N1.416 billion in 1,723 deals.

Trading in the top three equities namely, United Bank For Africa Plc, Zenith Bank Plc and FBN Holdings Plc (measured by volume) accounted for 297.889 million shares worth N3.095 billion in 3,998 deals, contributing 29.07 per cent to the total equity turnover volume.