The Nigerian Stock Exchange (NSE), last week, suffered the biggest weekly losses since April 2019, following massive selloffs and exit of investors, due to regulatory risks in the banking sector, a slump in oil prices, and increasing spread of coronavirus.
Consequently, the gains accumulated at the beginning of the year were wiped out, as market year-to-date performance turned negative, resulting in a whopping 4.28 per cent loss last week.
Specifically, the NSE All-Share Index and market capitalisation both lost 4.28 per cent to close the week at 26,216.46 and N13.658 trillion, respectively.
All other indices finished lower with the exception of the NSE Industrial Goods index, which gained 1.08 per cent, while the NSE ASeM Index closed flat.
There were also negative reactions to the 2019 unaudited full-year results, such that despite the high pay-out from these companies, share prices continued southward during the week.
Analysts have argued that continued illiquidity and low buying interests in the market are also contributory factors to the persistent lull, despite the compelling value and high yields on offer.
More so, the mixed global economic outlook and the ravaging Coronavirus also triggered panic selloffs in advanced and emerging markets, as funds flow into bonds and commodities for the safety of their capital, amidst fears that the outbreak could hit the operations of some big companies and earnings performance.
Reacting to the market performance, the Chief Research Officer, Investdata Consulting Limited, Ambrose Omodion, said: “The importance of liquidity in the equities market cannot be overemphasized; 80 per cent of movement in share price is a function of market liquidity, sectorial performance, and perception, while company’s performance or news influence the remaining 20 per cent.
“With the federal government suspending its plans to borrow N2trillion from the nation’s pension market, according to Finance Minister as well as early disbursement and implementation of the 2020 budget, especially capital projects and the expected NSE demutualisation to activate dead capital, all of which will likely push funds to the stock market.
“The market needs liquidity to play its role in driving economic development and growth. We expect the losing momentum to moderate on dividend news and resist further decline as more audited earnings hit the market in March. This is despite the likely continuation of the mixed intraday movement in the midst of profit-taking, with investors buying increasing positions in high dividend-paying stocks ahead of dividend declaration.”
Cordros Capital Limited said: “Amidst continued weak market sentiments, we advise investors to trade cautiously, taking positions in fundamentally justified stocks.”
Further breakdown of last week’s trading showed that a turnover of 1.547 billion shares worth N24.263billion was recorded in 21,646 deals by investors on the floor of the Exchange, lower than a total of 1.499 billion units worth N17.907billion that was exchanged in 18,515 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 1.267 billion shares valued at N17.205billion traded in 15,149 deals; thus contributing 81.91 per cent to the total equity turnover volume.
The conglomerates followed with 84.990 million shares worth N180.885million in 654 deals. The third place was the consumer goods industry, with a turnover of 65.965 million shares worth N3.918billion in 2,235 deals.
Trading in the top three equities namely, Guaranty Trust Bank Plc, United Bank for Africa Plc, and Zenith Bank Plc (measured by volume) accounted for 800.054 million shares worth N14.972 billion in 8,379 deals, contributing 51.72 per cent to the total equity turnover volume.
A total of 8,250 units valued at N69.155.40 were traded this week in 14 deals, compared with a total of 1,040 units valued at N3.606 million transacted last week in 12 deals.
Furthermore, 6,321 units of Federal Government Bonds valued at N7.194million were traded last week in 28 deals, compared with a total of 40,469 units valued at N47.681million transacted during the preceding week 25 deals.
About six equities appreciated at price during the week, lower than 24 in the previous week. Also 58 equities depreciated, higher than 28 in the previous week, while 99 stocks remained unchanged, lower than 111 recorded in the preceding week.
