Nigerian equities catch coronavirus fear, close week with N610bn loss
- Posts negative 2.23% decline YtD
- Expect further decline, experts warn
By Omobayo Azeez
The tide has turned against the Nigerian stock market as it joined the league of other global stock markets with year-to-date (YtD) performances in the red territory due to fear arising from the spread of Coronavirus.
For the first time since trading commenced on the floor of the Nigerian Stock Exchange this year, the equities market recorded a negative YtD return of -0.13 per cent on Thursday.
This was worsened by the -4.28 per cent weekly decline recorded at the close of activities on Friday which, consequently, left the year-to-date depreciation of the All Share Index (ASI) at -2.23 per cent.
In pecuniary value, the weekly decline amounted to N610 billion loss in equities investment at the exchange which totaled N13.658 trillion while the composite index followed suit to close lower at 26,216.46 basis points after shedding 1,172 points.
As session ended on last week, the ASI ranked second with the least loss among 28 exchanges across the globe, immediately coming after Canada’s S&P/TSX Composite Index (-2.23 per cent), but leading others such as USA’s Nasdaq (-4.53 per cent), China’s SSE Composite Index (-6.63 per cent), Australia’s All Ordinaries (-4.38 per cent) and Austria’s ATX (-13.13 per cent) among others.
During the week, Nigerian stocks suffered their biggest weekly loss since April 2019 with investors exiting on increasing regulatory risk in the banking sector, a slump in oil prices, and as the first case of the Coronavirus was reported in the country, market dealers said.
Benchmark index slipped below 27,000 points and market capitalization fell short of N14 trillion value during the week.
Commenting on the development, Azeez Lawal, head of capital market research at Capital Bancorp Limited, said the factors that run down the market are diverse.
These factors, he explained, ranged from outbreak of Coronavirus, to declining oil price in the global market to falling reserves in Nigeria and CBN’s increase of CRR for banks, among others.
“The global market has been in the negative zone since the outbreak of the disease which scared away investors from some markets. Nigeria is not immune from this global shocks but it actually took a new turn with the confirmation of the first corona case in Nigeria.
“The downturn can also be blamed on peculiar economic problems in Nigeria which has perpetuated apathy in the market. The CRR is still taking tolls while falling in reserves due to declining oil price in the global market also send a wrong signal to investors,” he said.
While noting that the storm in the market may not subside any time soon, investment analysts at Cordros Securities Limited counseled that “amidst continued weak market sentiments, we advise investors to trade cautiously, taking positions in fundamentally justified stocks.”
Meanwhile, a total turnover of 1.547 billion shares worth N24.263 billion in 21,646 deals were traded during the week by investors on the floor of the exchange, in contrast to a total of 1.499 billion shares valued at N17.907 billion that exchanged hands last week in 18,515 deals.
The financial services industry, measured by volume, led the activity chart with 1.267 billion shares valued at N17.205 billion traded in 15,149 deals; thus contributing 81.91 per cent and 70.91 per cent to the total equity turnover volume and value respectively.
The conglomerates followed with 84.990 million shares worth N180.885 million in 654 deals while the third place was consumer goods industry, with a turnover of 65.965 million shares worth N3.918 billion 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 and 61.70 per cent to the total equity turnover volume and value respectively.
The mood of the market is also portrayed in the market breadth as only six equities appreciated in price during the week, lower than 24 equities in the previous week, whereas, 58 equities depreciated in price, higher than 28 equities in the previous week.