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Political tension, sell-off sustain pressure on NSE’s indices

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Analyst sees gloomy week, as bargain hunting continues
Political tension ahead of the 2019 general elections, persistent sell-offs, as a reaction and bargain hunting by investors, have continued to spur free fall of equity prices.

Consequently, the All-Share Index and market capitalisation of the Nigeria Stock Exchange (NSE) tumbled for 10 consecutive times to close the week at 35,266.29 points and N12.875 trillion, representing 0.5 per cent decline.

At the close of transactions last week, all other indices finished lower, with the exception of the NSE Premium, NSE Lotus II and NSE Industrial Goods, which rose by 0.59 per cent, 0.23 per cent and 1.29 per cent respectively, while NSE ASeM Index closed flat.

The negative influence of the nation’s political turmoil was so strong and compelling on the market last week that investors seem to have forgotten about the strong fundamentals of these companies and the recent interim dividends paid by those in the banking sector.

Analysts at the Investdata Consulting Limited said the decline in July PMI and consumer confidence index was due to the fall in consumer demands, which affected the performance of consumer goods manufacturing companies, as reflected in the half-year corporate earnings.

These, according to the research firm, has further depressed the share prices of these companies on the NSE, a pointer that all is not well with the economy.

“The benchmark All-Share Index of Nigeria’s stock market, as a leading indicator of the economy, has suffered a year-to-date decline of 9.48 per cent. This is after it recorded almost 17 per cent jump in January 2018 alone, before the ongoing downtrend that had lasted more than seven months.

“Of particular note are Zenith Bank, Guaranty Trust Bank and, capped on Thursday by Stanbic IBTC Holdings’ offer of N1 dividend per share, the highest so far, as contained in its second quarter numbers. Last year, the group paid 50 kobo as interim dividend.

“Besides the political tension ahead of the 2019 general elections, data so far published, showed a slowdown in economic activities, even as the July Consumer Price Index report published by the National Bureau of Statistics (NBS), affirms further move towards single-digit inflation.

“We expect the market to remain in red as bargain hunters take advantage of the low-price regime ahead of political party primaries. The ongoing anxiety in Nigeria’s political environment by party leaders is scaring investors away,” the analysts said.

Further breakdown of last week’s trading, showed that the financial services industry (measured by volume) led the activity chart with 891.785 million shares valued at N8.251 billion, traded in 9,187 deals.

It thus contributed 77.78 per cent and 65.77 per cent to the total equity turnover volume and value respectively.

The consumer goods industry followed with 79.149 million shares, worth N2.631 billion in 2,931 deals, while the conglomerates industry ranked third, with a turnover of 60.294 million shares, worth N93.993 million in 694 deals.

Trading in the top three equities- Nem Insurance Plc, United Bank for Africa Plc and Mansard Insurance Plc, measured by volume, accounted for 360.623 million shares, worth N1.967 billion in 970 deals.

This contributed 31.45 per cent and 15.68 per cent to the total equity turnover volume and value respectively.

Consequently, a total turnover of 1.147 billion shares, worth N12.546 billion, were recorded in 16,649 deals by investors on the floor of NSE in contrast to 925.630 million shares, valued at N8.333 billion, that were exchanged the previous week in 15,565 deals.

About 2,647 units of Federal Government Bond, valued at N2.725 million, were traded this week in 17 deals, compared with 7,787 units, valued at N8.005 million, transacted in 11 deals in the previous week.

Also, 16 equities appreciated in price during the week, lower than 20 in the previous week, as 56 others depreciated in price, higher than 47 equities of the previous week, while 97 equities remained unchanged, lower than 103 equities recorded in the previous week.


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