Nigerian equities hit two-month low with N181b loss

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Nigerian equities hit two-month low with N181b loss
February 25, 2020
 
in Equities

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Nigerian equities suffered their worst single-day decline in the past two months yesterday as the stock market reopened to massive selloffs across the sectors.

Benchmark indices at the Nigerian Stock Exchange (NSE) indicated average decline of 1.27 per cent yesterday, equivalent to net capital depreciation of N181 billion, the largest single-day decline since December 24, 2019.

With 32 decliners to five advancers, the market was overwhelmed by the bears, leaving all sectors in the red. Average year-to-date return dipped to 0.74 per cent while the market has lost an average of 6.25 per cent so far this month.

Market analysts said investors’ risk aversion was further stoked by feelers that the influential banking sector might be further subjected to increased regulatory headwinds due to the statements attributed to the Central Bank of Nigeria (CBN) at the Bankers’ Committee meeting last week.

The All Share Index (ASI)- the value-based common index that tracks all share prices at the Exchange, dropped by 347.59 points or 1.27 per cent to close at 27,041.03 points as against 27,388.62 points recorded as opening index.

Aggregate market value of all quoted equities also decline by the same margin from its opening value of N14.268 trillion to close at N14.087 trillion.

All sectoral indices closed negative. The NSE Banking Index declined by 4.78 per cent. The NSE Industrial Goods Index dropped by 0.85 per cent. The NSE Consumer Goods Index dipped by 0.72 per cent. The NSE Insurance Index depreciated by 0.47 per cent while the NSE Oil and Gas Index dipped by 0.45 per cent.

Julius Berger Nigeria led the decliners with a loss of N1.60 to close at N22.40 per share. Nigerian Breweries followed with a drop of N1.45 to close at N47. Guaranty Trust Bank dropped by N1.05 to close at N26.90 per share. Cadbury Nigeria lost 90 kobo to close at N8.20 while Zenith Bank declined by 76 kobo to close at N19.10 per share.

On the positive side, Law Union and Rock Insurance led the advancers with a gain of 7.0 kobo to close at 80 kobo per share. May and Baker Nigeria rose by 5.0 kobo to close at N1.87. Sterling Bank chalked up 4.0 kobo to close at N1.50 per share. Linkage Assurance added 2.0 kobo to close at 45 kobo while Vitafoam Nigeria inched up by a kobo to close N4.51 per share.

Total turnover stood at 429 million shares valued N7.29 billion in 4.533 deals. Banking stocks dominated the activities chart. Guaranty Trust Bank was the most active stock with a turnover of 177.13 million shares valued N4.79 billion. FBN Holdings followed with 60.09 million shares worth N329.48 million while Zenith Bank placed third with 56.15 million shares valued N1.09 billion.

“We anticipate a mixed performance in subsequent trading sessions as investors are expected to position for dividends on one hand and profit taking on the other,” Afrinvest Securities stated.

Nigerian equities had recorded net loss of N190.8 billion last week as weak domestic sentiment and global risk concerns sustained continued depreciation in share prices in Nigeria.

Benchmark indices had indicated average decline of 1.32 per cent at the weekend, equivalent to net capital depreciation of N190.8 billion for the immediate past week.

Despite the onset of the aggressive period of the earnings season, investors in Nigerian equities remained cautious and bargain-hunters were overwhelmed by discounted open market orders by divesting investors seeking to attract deals in a supply-driven buyer’s market.

Most market analysts remained cautious about the outlook for the Nigerian market in spite of expectations that immediate returns, in terms of dividend yields, may significantly overwhelm nominal saving rates and average yield in the fixed-income market.

“Following four weeks of consecutive losses, we expect to see some bargain hunting in early trades next week. However, we maintain a bearish outlook in the near term as overall investor sentiment remains weak,” Afrinvest Securities, a major stockbroking firm, had stated at the weekend.

Analysts at Cordros Securities advised investors to trade cautiously and take positions only in “fundamentally justified stocks”, citing the continued weak market sentiments.