11 January 2016, Abuja – Stakeholders in the Nigerian capital market have lamented the lull in market activities and the huge lose recorded in the Nigeria Stock Exchange last week, where investors lost over N455 billion in the first five tradings days of the year. The huge losss according to stakeholders was due to delayed policy pronunciations and direction by the Federal Government.
They however expressed optimism that the recent visit by the International Monetary Fund, IMF boss, Christine Lagarde would spur the Federal Government to quickly take actions that would enhance the economy and boost the stock market in particular.
Analysis of activities on the Nigeria Stock Exchange (NSE) last week showed that market capitalisation, which represents the total value of securities traded on the NSE declined by over N455 billion to close trading last Friday at N9.295 billion from N9.850 trillion it opened during the first trading day of the year, 2016 .
On Monday market capitalisation shed N93.521billion to close at N9.757 trillion; On Tuesday it dropped by over N93 billion to close at N9.664 trillion; On Wednesday it shed N317 billion to close at N9.347 trillion.
However, on Thursday, market capitalisation rebounded to appreciate by over N30 billion to close at N9.377 trillion, while on Friday market capitalisation declined by over N82 billion to close at N9.295trillion. In the same vein, another stock market gauge, the All Share Index declined by 1,6‘13.86 points or 5.63 per cent in five trading days from 28,642.25 it opened the market to close last Friday at 27,028.39 points.
The breakdown show that the Index on Monday shed 371.93 points to close at 28,370.32 points; On Tuesday the Index declined by 268.18 points to close at 28,102.14 points; On Wednesday it dropped by 911.38 points to close at 27,180.76 points; On Thursday, the index rebounded and went up by 85.42 points to close at 27,266.18.
Further analysis showed that that 899.604 million shares worth N7.669 billion in were traded by investors in 14,164 deals on the floor of the exchange in contrast to a total of 2.965 billion shares valued at N9.364 billion traded penultimate week in 7,174 deals.
The Financial Services Industry (measured by volume) led the activity chart with 764.790 million shares valued at N4.858 billion traded in 8,904 deals; thus contributing 85.01 percent and 63.34 percent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 40.164 million shares worth N100.471 million in 626 deals. The third place was occupied by the Consumer Goods Industry with a turnover of 40.006 million shares worth N1.707 billion in 2,116 deals.
Trading in the top three equities namely – Access Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc.(measured by volume) accounted for 339.027 million shares worth N2.800 billion in 3,116 deals, contributing 37.69% and 36.51 percent to the total equity turnover volume and value respectively.
Also traded during the week under review were a total of 12,016 units of Exchange Traded Products (ETPs) valued at N2.050 million executed in 25 deals, compared with a total of 60,171 units valued at N484,396.36 transacted last week in 20 deals.
Furthermore, Seventeen (17) equities appreciated in price during the week under review, lower than forty-two (42) equities in the penultimate week. Fifty (50) equities depreciated in price, higher than twenty-two (22) equities in the penultimate week, while one hundred and twenty-three (123) equities remained unchanged, lower than one hundred and twenty-six (126) equities recorded in the previous week.
Top Ten Price Gainers
Okomu Oil Palm Company Plc led the top ten price gainers recording 19.64 percent price appreciation. Others are Vono Products Plc (18.52%); Learn Africa Plc (15.49%); Lafarge Africa (8.47%); Cement Company of Northern Nigeria (8.02%); Fidson Healthcare Plc (8.00%); Berger Paints Nig. Plc (5.00%); E-transact International Plc (4.93); Portland Paints and Products Nig. Plc (4.79%) and Ikeja Hotels Plc (4.47%).
Top Ten Price Gainers
Skye Bank Plc led the top ten price losers recording 25.32 percent price loss. Others are Unity Bank Plc (24.11%); Nigerian Breweries Plc (19.49%); Tiger Branded Consumer Goods Plc (16.81%); Honeywell Flour Mills Plc (15.61%); Eterna Plc (13.66%); Union Bank of Nigeria Plc (13.04%); Transnational Corporation of Nigeria (12.50%); Glaxosmithkline Consumer Nig. Plc (12.28%); FBN Holdings Plc (11.89%).
Commenting on these developments, Chairman Proactive Shareholders of Nigeria, PROSAN Mr. Oderinde Taiwo in said “The Nigerian stock market is experiencing this negative response because the Muhammadu Buhari led Federal Government policy direction came out late, even on some vital issues, there are no policy direction yet. We should know that it is government’s policy direction that attract foreign and core investors into any market. So that delay in the appointment of ministers and pronouncement of policy direction really affected investment decisions in our market.
Continuing, he said “With the recent visit of the IMF boss in Nigeria, there is likely going to be positive changes in the economy and our market in particular once the Federal Government is able to execute some of the initiatives recommended to it. All these and more will likely attract investors to the market.”
Another stakeholder, Mr. Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria, PSAN said “The decline in our market is not only affected by factors within the economy but also global issues. The fall in global oil has been a major factor affecting Nigerian economy. So our market has been resilient, though there are issues that the regulators in our market need to address. When a finger of an investor is burnt, he or she will be careful to release his or her other fingers to be burn. That is what is really affecting the market.”
Continuing, he said “The decline we are experiencing in our market now is somehow normal as some investors are selling their shares to meet up with other expectations. Remember, Christmas and new year holidays are over and people had spend money and they needed cash to pay for their children’s school fees and other essential needs, that is why the prices of equities are dropping.
But, there is hope that the market will rebound once investors see clearer picture of the Federal Government‘s policy direction. The Buhari administration has started fighting corruption and tackling insecurity. So these are some of the things that will attract investors to invest in our economy.”’
In his own view, Mr. Emeka Madubuike, Chairman, Association of Stockbroking Houses of Nigeria (ASHON), said there is need to rid the economy of every uncertainty to inject confidence in the investors. He explained that riding the market of uncertainty requires discipline across all strata of the economy.
“The market mirrors the economy; if the economy is down, the market will be down. For me I think what the market requires is a situation where the economy has a lot of discipline. It does not matter, for instance, how much the budget is; but it is the implementation that is critical and it requires a lot of discipline across all levels for us to have an economy that is devoid of uncertainty.
“There are too many uncertainties in the economy and uncertainty does not give confidence for investment because if you are investing money, you are doing so not for today, but for tomorrow. When people are not sure of what will happen tomorrow, they may likely not invest; so that is why we are having this lull.”
He added: “From my own point of view, there need to be a lot of accountability in the ways things are done in our system. There needs to be consistency in the way government is run, in the ways policies are pursued; there need to be consistency. And there need to be reward and punishment depending on what people have done and people have not done. As soon as investors see a steady pattern, a lot more investment will come.”
Madubuike explained that the market is driven by two factors – fear and greed; that’s what drives the market. “When investors don’t see where the economy is going, they won’t invest. That is when the fear factor comes in, but if they are sure that the economy is doing well, then greed will come in. When do you exit, when do you come in. Those are the two factors that drive the market”.