Fuel scarcity cripples NSE’s trading activities

The lingering scarcity of petrol, which has brought virtually every human activity to a standstill in every part of Lagos, has also affected trading activities at the Nigerian Stock Exchange (NSE), where trading on stocks and bonds has recorded an unprecedented poor attendance since the beginning of the week.

The poor performance of the market on Monday was attributed to the inability of many stockbrokers to be physically present in the market. And as a result, equity transactions on the NSE re-opened for the week on a downturn, causing the market capitalisation to depreciate by N54 billion on Monday.

The market capitalization, which opened at N8.773 trillion lost N54 billion or 0.62 per cent to close at N8.719 trillion. Similarly, the All-Share Index lost 158.02 points or 0.62 per cent to close at 25,349.07 against 25,507.09 posted on Friday.

Nestle topped the losers’ chart, dropping by N10 to close at N690 per share. Nigerian Breweries trailed with a loss of N3.78 to close at N102.61, while Ashaka Cement dropped N2.22 to close at N20.58 per share.

Lafarge Africa lost N1.51 to close at N75 while Okomu Oil shed N1.49 to close at N28.36 per share.
On the other hand, Seplat led the gainers’ table by N6.05 to close at N306.05 per share. Total followed with a gain of N3.78 to close at N157.60 while Dangote Cement gained N1 to close at N172 per share.

Custodian and Allied Insurance went up by 18 kobo to close at N3.90 and E-Tranzact increased by 13 kobo to close at N2.80 per share.

A stockbroker, who spoke to The Guardian on phone on the issue, advised the government to quickly address the problem of fuel scarcity, because it was causing more harm than good to the entire economy.

On how it was affecting the market, he said: “It is affecting it because the investors who are the clients of the stockbrokers are unable to come to mandate the brokers to sell or buy stocks. If the clients do not come, what can the brokers do?

“The fuel scarcity is affecting everybody in the country, not only the stockbrokers and trading at the NSE alone.

“Today (yesterday) is even worse because most of us are unable to go the NSE because no petrol and we find it difficult to even get public transport to go out,” the broker lamented.

On how the poor attendance is affecting the movement of stock prices, he said: “You know the more stockbrokers we have on the floor the merrier. If many are absent, that will differently reflect in the price movement because the large turnout of brokers will account for the positive and negative movement of stock prices.”

On whether the development will affect capitalization of the market, he said: “When turnover is poor as a result of lack of business occasioned by the absence of traders, definitely that will adversely affect capitalization.”

Asked if the fuel scarcity will in any way affect the performance of listed firms, the stockbroker replied that since the firms are also a part of the economy, they too are experiencing the hard effects of the fuel crisis.

On why the stockbrokers are not availing themselves of the remote trading platform at the exchange to do their trading this time around, the stockbroker retorted: “Is the remote trading platform in the stockbrokers’ homes? Is it not in their offices the facilities are installed? How do you expect them to move from their homes to their offices when there is problem of fuel scarcity in the town that has hindered the movement of vehicles? The nose and the eye are very close to each other, whatever affects the eye will affect the nose also and will make the nose to be running; and if it is the nose that is affected, the eye will become reddish,” he said.

It would be recalled that Stockbrokers began full remote on-line system of trading on the Nigerian Stock Exchange some years ago. The development placed the Exchange ahead of its peers in Africa in terms of technological development.

The facility was introduced to complement the successful upgrade of the Automated Trading System (ATS) that was installed in the Exchange a year earlier. Experts from Canada were contracted during the period to interconnect the ATS with the Central Securities Clearing System (CSCS) to facilitate the remote trading system.

The authority of the NSE explained that time that, with the full remote trading, stockbrokers could now trade on-line from anywhere all over the world and that the incidence of fraud would be reduced.