Analysts blame proposed electricity tariff hike, PMS increment
The Nigerian Stock Exchange (NSE) suffered another week of losses, amid rising COVID-19 cases, and the persisting foreign exchange (forex) illiquidity in the market.
Consequently, the NSE All-Share index (ASI), and market capitalisation depreciated by 1.99% to close the week at 24,336.12 and N12.695 trillion, respectively. All other indices also finished lower.
But analysts linked the persistent selloff to lack of coordination in policy articulation, formulation and direction. Specifically, the Chief Research Officer, Investdata Consulting Limited, Ambrose Omordion, said the proposed hike in electricity tariff and recent increase in the pump price of premium motor spirit (petrol) to N143.80 per litre, are clear indications that monetary and fiscal authorities are still not complementing each other.
According to him, these decisions would subject the people to more hardship and threaten efforts to mitigate the effects of the COVID-19 crisis on the economy
He said: “It is sad that this same government that recently announced a N2.3-trillion stimulus package to ease the pains of the pandemic on the people, and continued rise in inflationary pressure, is raising fuel price, a situation that is likely to result in an increase in the prices of goods and services.
“We have before now, continually advised investors to take short-term risks in the stock market through our daily research and analysis throughout the month of June, because we have seen different economic data pointing to various directions, reflecting the impact of the COVID-19 pandemic on the economy.”
Analysts at Codros Capital said: “In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria, and weak economic conditions.
“Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.”Last week, a turnover of 961.833 million shares worth N9.181 billion was recorded in 20,058 deals by investors on the floor of the Exchange, in contrast to the 739.375 million shares valued at N8.563 billion that exchanged hands in 17,248 deals during the previous week.
The financial services industry (measured by volume) led the activity chart with 618.714 million shares valued at N4.338 billion traded in 9,669 deals; thus contributing 64.33 per cent to the total equity turnover volume.
The consumer goods industry followed with 91.119 million shares worth N2.227 billion in 3,703 deals. The third place was the conglomerates industry, with a turnover of 60.640 million shares worth N62.779 million in 556 deals.
Trading in top three equities namely, FBN Holdings Plc, Guaranty Trust Bank Plc, and United Bank for Africa Plc (measured by volume) accounted for 275.099 million shares worth N2.818 billion in 3,497 deals, contributing 28.60 per cent to the total volume.
Furthermore, a total of 358,114 units valued at N1.912 billion were traded last week in 25 deals, compared with 199,011 units valued at N1.525 billion transacted a week earlier in 13 deals.
A total of 4,590 units worth N5.515 million were traded in 14 deals compared with 9,284 units valued at N10.180 million transacted in the previous week in eight deals.
About 13 equities appreciated in price during the week, lower than 18 equities a week ago, while 59 equities shed prices, higher than 43 in the previous week, and 91 equities remained unchanged, lower than 102 equities recorded a week ago.