VAT resumption, economic uncertainties sink stock index below 27,000 benchmark

Sell pressure in Nigeria’s equities market exacerbated by the re-introduction of value added tax on transactions coupled with lack of fiscal incentives for investment has resulted in depleting the stock market’s lead index below the psychological bench mark of 27,000 basis points.

These were the submission of stock brokers who spoke with business a.m Friday. According to them, despite positive corporate actions announced by companies which were expected to spur an improved performance, the sell pressure on stocks continued.

The negative rout in the local bourse worsened last week, as the All-Share Index (ASI) of the Nigerian Stock Exchange (NSE) and Market Capitalization both depreciated by 1.40 percent to close the week at 26,925.29 (below the 27,000 psychological mark) and N13.121 trillion respectively.

In the same vein, all other indices finished the week lower with the exception of NSE Premium Index which appreciated by 0.64 percent.

Consequently, the performance of year to date (YTD) loss widened to 14.33 percent.

Although it was a brief trading week as the market opened for three days in observance of the public holidays (Monday 12th and Tuesday 13th August 2019) declared by the Federal Government of Nigeria to mark the Eid-El-Kabir celebrations, market traders said they expected a brief rebound Friday due to the corporate action announced by Guaranty Trust Bank.

The bank released its audited financial results declaring a 4 percent increase in post tax profit of N99 billion and declared an interim dividend of 30 kobo per share which improved its share price by 0.97 percent to settle at N26. The share price growth was however not sufficient to reverse market sentiments.

A review of the week’s overall performance however showed that total turnover of 726.607 million shares worth N10.459 billion in 12,915 deals were traded by investors on the floor of the Exchange in contrast to a total of 1.081 billion shares valued at N12.014 billion that exchanged hands previous week in 16,246 deals.

The financial services industry, measured by volume led the activity chart with 554.910 million shares valued at N6.499 billion traded in 8,376 deals; thus contributing 76.37 percent and 62.14 percent to the total equity turnover volume and value respectively.

The conglomerates industry followed with 76.161 million shares worth N86.854 million in 621 deals. The third place was consumer Goods industry with a turnover of 29.783 million shares worth N754.919 million in 1,855 deals.

Top three traded stocks for the week in volume terms were Guaranty Trust Bank Plc, Zenith Bank Plc and Transnational Corporation of Nigeria Plc. They accounted for 303.101 million shares worth N5.404 billion in 2,842 deals, contributing 41.71 percent and 51.67 percent to the total equity turnover volume and value respectively.