07 January 2016, Lagos — Global stocks have continued to dwindle as the Nigerian stock market, yesterday, recorded another setback, with investors recording the highest loss in 13 months with 3.3 per cent to close at 27,180.76 points.
Specifically, investors lost over N502.6 billion on the Nigerian Stock Exchange, NSE, for three consecutive days since the market opened this year.
The market capitalisation, which represents the total value of securities, traded on the NSE, yesterday, declined by N316.877 billion to close at N9.347 billion. On Tuesday, market capitalisation dropped by 92.234 billion while on Monday it shed N93.521billion to close at N9.850 trillion from N9.850 trillion it opened in the year.
In the same vein, another stock market gauge, the All Share Index, yesterday, recorded a major decline by 921.38 points to close at 27,180.76 points. On the Tuesday, the Index shed 268.18 points to close at 28,102.14 points, while on Monday, it dropped by 271.93 points to close at 28,370.32 points.
A cursory review showed that investors on the NSE had lost 5.10 per cent from the Year-to-Date, YtD, signifying weak economic activities.
Meanwhile, volume traded on the NSE, yesterday, increased by 3.45 per cent from 195.969 million to 202.724 million, while the total value of stock traded decreased by 21.73 per cent from 1.892 billion to 1.481 billion in 3,012 deals.
The Financial Services sector led the activity chart with 178.971 million shares exchanged for N0.917 billion. Consumer Goods came next with 8.467 million shares traded for N 0.326 billion, Conglomerates, Services, Industrial Goods sectors followed in that order on the activity chart.
FCMB, Access Bank, Zenith Bank, FirstBank Nigeria Holding, FBNH and Guaranty Trust Bank were the most active stocks by volume. WAPCO, Berger Paints, NAHCO, Fidson and Ikeja Hotel emerged the highest price gainers on the chart, while Dangote Cement, Union Homes, Skye Bank, Nigerian Breweries NB and Union Bank of Nigeria, UBN, topped the losers Chart.
Stocks fell around the world, with the Dow Jones Industrial Average dropping 200 points, while bonds gained with the dollar on haven demand as China’s unexpected weakening of its currency once again raised fresh concern about the strength of the global economy.
U.S. stocks headed for a three-month low and emerging-market equities fell to the cheapest since 2009. Brent crude reached its lowest level since 2004, as oil supplies at a U.S. hub rose to a record. Developing-nation currencies sank to an all-time low, with Korea’s won weakening after North Korea’s claim of a nuclear test added to geopolitical risks already heightened by Middle East tensions. The yen strengthened and Treasuries rose for a fifth session.
“This is risk aversion right now,” Benjamin Dunn, president of Alpha Theory Advisors, which works with hedge funds overseeing about $6 billion. “This is like a replay of the same things that moved the markets in August. We’re perhaps getting confirmation that China is as bad as people think. We’ve lost the tailwinds from the Fed and investor enthusiasm and this adds to the mosaic of fear that’s out there right now.”
China’s growing tolerance for a weaker yuan signaled the government is struggling in its efforts to shore up economic growth and rekindled concern seen in August, when a shock devaluation sent U.S. stocks to their first correction in four years amid worry China’s slowdown would hamper global growth. Disinflation in Europe and a renewed selloff in commodities may make it harder for central banks to meet their policy goals.
U.S. equities pared the worst of their losses amid data that eased concerns about the strength of the world’s largest economy. American service companies continued to outperform their manufacturing counterparts in December, as orders and employment picked up. A separate report showed companies added more workers than projected last month, two days before the government’s jobs report.
“I don’t know we’ll see a panic unless we see it extend for several more days,” David Spika, global investment strategist for GuideStone Capital Management, said by phone. “We started the year with a low level of conviction. We’ve conditioned our clients for much higher levels of volatility — to expect the market to go straight up is not very smart.”
The Stoxx Europe 600 Index slid 1.5 percent. Commodity producers and carmakers — companies with some of the largest sales exposure to China — led declines. Tuesday’s rebound from the worst-ever start to the year was short-lived and the Stoxx 600 is down 3.4 percent this week.
The MSCI Emerging Markets Index slid 1.1 percent to the lowest since July 2009, with all but one of the 10 industry groups retreating. Technology companies led losses, tumbling to the lowest level since September. Benchmark gauges in Hong Kong, Taiwan and Saudi Arabia dropped at least 1 percent.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 0.9 percent, while the Shanghai Composite Index jumped 2.3 percent amid efforts by authorities to support the market. Marc Faber, publisher of the Gloom, Boom & Doom Report said in an interview on Bloomberg TV the Chinese economy may be headed for a “hard landing” as borrowers are taking on record amounts of debt to repay interest on their existing obligations.
The Bloomberg-JPMorgan Asia Dollar Index fell to the lowest level since April 2009 as the People’s Bank of China lowered its daily fixing by 0.22 percent to the weakest level since April 2011, raising the risk other nations will need to lower their exchange rates to remain competitive.
“This isn’t good for the rest of the world. Until China stops weakening the yuan, global markets will struggle to stabilize,” said Koichi Kurose, Tokyo-based chief market strategist at Resona Bank Ltd. “The Chinese authorities may be trying to prop up the economy by boosting exports, but while that’ll help one part of China’s economy, it comes at the sacrifice of someone else.”
South Korea’s won fell 0.8 percent to the weakest level since September while the equity benchmark slipped 0.3 percent. North Korea said it successfully tested a hydrogen bomb, a move that escalates tensions on the peninsula with neighbors South Korea and Japan.
U.S. Treasuries advanced for a fifth day, extending their winning start to 2016, as falling equities and oil prices added to reasons for investors be bearish on the outlook for inflation and global growth. The yield on 10-year notes fell five basis points to 2.19 percent.
Euro-region government bonds also gained, pushing the yield on 10-year German debt to 0.51 percent, the lowest in more than a month, as signs of slowing global growth and a further drop in oil boosted demand for fixed-income assets.
*Peter Egwuatu – Vangaurd