CBN’s CRR adjustment triggers equities’ 28 per cent weekly loss
The nation’s equities market suffered its first weekly loss in 2020 as the impact of the CBN’s hike in the Cash Reserve Ratio (CRR) by 500bps to 27.5 per cent spurred sell-off in banking stocks.
Consequently, the All-Share Index and market capitalisation of the Nigerian Stock Exchange (NSE) depreciated by 2.65 per cent to close the week at 28,843.53 points and N14.857 trillion respectively.
All other indices finished lower with the exception of NSE Insurance and NSE Consumer Goods, which appreciated by 0.90 per cent and 0.09 per cent respectively, while NSE ASeM Index closed flat.
But analysts, at the weekend, said the mixed trend would continue in the midst of profit-taking and positioning by investors, as they take advantage of the pullbacks to recoup their investments.
Specifically, Codros Research said: “In the coming week, inflows from OMO maturities from instruments worth NGN327.56 billion are expected on the 4th and 6th of February. This should boost system liquidity towards the end of the week and result in the OVN rate trending southwards week-on-week.”
Afrinvest Securities Limited, added: “We believe that the market would continue this downtrend, especially as earnings released have been largely mixed and insufficient to boost investor confidence.”
The Chief Research Officer of Investdata Consulting, Ambrose Omordion, also noted: “We expect the mixed trend to continue in the midst of profit-taking and positioning by investors taking advantage of the pullbacks, as the impact of last week’s CRR adjustment, slows down ahead of the full-year earnings reporting season.
“This is also against the backdrop of capital wave in the financial market that may change in the midst of the unstable economic outlook for 2020.”
A total turnover of 1.561 billion shares worth N26.073 billion in 21,444 deals was recorded on the floor of the exchange, in contrast to a total of 1.237 billion shares valued at N22.762 billion that was exchanged in 21,156 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 1.154 billion shares valued at N13.650 billion traded in 11,306 deals; thus contributing 73.93 per cent to the total equity turnover volume and value respectively.
The consumer goods followed with 137.115 million shares worth N3.177billion in 2,908 deals.
The third place was ICT industry, with a turnover of 94.464 million shares worth N6.554 billion in 894 deals.
Trading in the top three equities, namely, Veritas Kapital Assurance Plc, Zenith Bank Plc and Guaranty Trust Bank Plc (measured by volume) accounted for 604.668 million shares worth N9.370 billion in 4,069 deals, contributing 38.74 per cent to the total equity turnover and value respectively.
Last week, a total of 29,514 units valued at N7.781 million were recorded in 14 deals, in contrast to a total of 141 units valued at N520, 511.70 that changed hands in six deals.
Also, 17 equities appreciated in price during the week, lower than 32 equities in the previous week and 44 equities depreciated in price, higher than 28 equities in the previous week, while 102 equities remained unchanged, lower than 103 equities recorded in the preceding week.
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