Apathy, weak sentiments persist amid rising insecurity, others
Indices plunge by 1.11% in five trading days
For the third consecutive week, weak sentiments have continued to dominate the domestic equities market, as investors lose 1.11 per cent.
Specifically, the All-Share index and market capitalisation of the bourse depreciated 1.11 per cent to close the week at 27,755.87 points and N14.456 trillion respectively.
All other indices finished lower with the exception of NSE AFR Div Yield and NSE Industrial Goods indices, which appreciated by 0.11 per cent and 0.78 per cent respectively, while NSE ASeM Index closed flat.
The NSE has suffered from the twin effects of Monetary policy tightening through last month’s upward adjustment of the Cash Reserve Requirements (CRR) by the Central Bank of Nigeria (CBN), just as the directive that companies file their Q4 financials has deflated speculative trading in the new year.
This, in addition to the rising insecurity, slow economic rebound, resulted to massive selloffs as witnessed at the beginning of the week.
The new pattern of reporting triggered selloff, as the Q4 numbers came without corporate actions because they are unaudited.
Analysts argued that the prevailing low trades and activities on the exchange are a clear reflection of indecision among traders and investors as the market searches for direction after the adjustment of Cash Reserve Requirements of banks triggered outflow from the stock market.
The decline was despite the fact that Nigerian Breweries filed its full-year audited report with the directors offering a final dividend of N1.51 per share.
Analysts at Codros Capital said: “In our view, the trend witnessed last week is likely to persist, as weakening market sentiment and the absence of positive catalysts are expected to pressure market returns. Nonetheless, we advise investors to take positions in fundamentally justified stocks.”
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said: “We expect the market to sustain its reversal as the index remains between 50 per cent and 61.8 per cent Fibonacci retracement ahead of more audited earnings hitting the market any moment.
“Despite the likely continuation of the mixed intraday movement in the midst of profit-taking, with investors buying increasing position ahead of dividend news.
“This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation and unstable economic outlook for 2020.
“Moreso, investors and traders are positioning in anticipation of the 2019 full-year earnings reports, amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend.”
Further breakdown of last week’s trading dictated that a total of 912.175 million shares worth N12.126 billion in 17,083 deals were recorded by investors on the floor of the exchange, in contrast to a total of 1.478 billion shares valued at N20.295 billion that was exchanged in 23,263 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 624.219 million shares valued at N7.129 billion traded in 9,640 deals; thus contributing 68.43 per cent to the total equity turnover volume.
The conglomerates followed with 93.204 million shares worth N452.093 million in 861 deals. The third place was Oil and Gas industry, with a turnover of 59.267 million shares worth N124.638 million in 1,254 deals.
Trading in the top three equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc. (measured by volume) accounted for 304.089 million shares worth N5.788 billion in 4,290 deals, contributing 33.34 per cent to the total equity turnover volume and value respectively.
A total of 1,540 units valued at N137,421.20 were traded this week in 5 deals, compared with a total of 3,840 units valued at N12.029 million transacted last week in eight deals.
A total of 23,923 units of Federal Government Bonds valued at N28.986 million were traded this week in 22 deals, compared with a total of 55,246 units valued at N63.094 million transacted last week in 15 deals.
Also, 19 equities appreciated in price during the week, higher than 15 equities in the previous week. 35 equities depreciated in price, lower than 49 equities in the previous week, while 109 equities remained unchanged, higher than 99 equities recorded in the previous week.