Nigerian stocks lose steam as year-to-date gain moves to negative region on currency, country risks

Nigerian stocks continued their downtrend Thursday, recording negative year-to-date (YTD) gain as currency and country risks influenced investors to move their money elsewhere.

“The two risks investors are concerned about now is currency and country risks,” Oscar Onyema, chief executive officer of the NSE, told reporters in Lagos Thursday.

“You would probably see activity in the market when there is a catalyst for it, otherwise people would want to wait and see from a political perspective before going on with their large investment plans. That is the feedback they are giving us.”

The sustained selloffs in the local bourse, which have persisted for 11 days, pulled the benchmark index, the NSEASI 1.3 percent lower to 38,104.54 points, the lowest in 5 months. This is just as year-to-date return fell to a deficit of 0.4 percent.

Consequently, market capitalisation lost N181.8 billion to settle at N13.8 trillion dragged majorly by NESTLE (-4.4%), DANGCEM (-1.0%) and INTERBREW (-4.8%).

Activity level strengthened as volume and value traded inched 39.2 percent and 108.0 percent higher to 476.2 million units and N9.9 billion respectively. ZENITH (127.2m units & N3.3bn), GUARANTY (74.0m units & N3.0bn) and UBA (65.6m units & N700.8m) were the top traded by volume and value respectively.

Relatedly, StanbicIBTC Holdings Plc. on the day announced a share acquisition by its parent company, Stanbic Africa Holdings, which would increase its shareholding in the Nigerian bank to 64.4 percent.

Sector performance maintained its bearish trend as four of five major indices closed southwards. The consumer and industrial goods indices lost 2.6 percent and 2.1 percent respectively on account of continued selloffs in NESTLE (-4.4%), INTERBREW (-4.8%), NIGERIAN BREWERIES (-1.9%), DANGCEM (-1.0%) and WAPCO (-4.9%).

Similarly, the banking index declined 1.1 percent due to price depreciation in GUARANTY (-1.2%) and ACCESS (-4.6%) while the oil & gas index waned 0.3 percent due to profit taking in FORTE (-9.1%). On the flipside, the insurance index gained 0.2 percent as price appreciations in LINKASSURE (+1.2%) and MBENEFITS (+2.8%) buoyed the index.

Investor sentiment as measured by market breadth (advance/decline ratio) declined to 0.8x from 0.9x as 21 stocks advanced against 26 stocks that declined.

The day’s top gainers were CCNN (+10.1%), FCMB (+8.1%) and FBNH (+5.7%) while INTERBREW (-9.6%), FORTE (-9.1%) and OKOMUOIL (-5.9%) were the day’s top losers.

“Despite the negative performance, we noticed some bargain hunting in small and mid-cap stocks, hence market performance could improve in the final trading session. Our view is further buttressed by the fact that the Relative Strength Index of the market is currently at 12.55 points, which is in the oversold region and this is also an indicator of a reversal,” say analysts at Afrinvest Research.

Nigerian stocks, in January were world-beaters but had to given up their gains for 2018 as risk-averse investors are selling off.

“Risk aversion and apathy from portfolio investors is taking its toll on the Nigerian market,” Sewa Wusu, an analyst at SCM Capital in Lagos, is reported to have said, adding that increasing yields in treasury bonds in advanced economies, particularly in the U.S., may have also shifted focus from the Nigerian market.