Investors’ divestments cost stock market N1.8tr in six months
…Experts worry over persistent migration of fund from stock market
The continuous exit of funds from the equities market to another investment instrument, especially the fixed income segment has become a source of worry to capital market stakeholders, as they urged the Federal Government to tackle growing security challenges in Nigeria.
The stakeholders argued that insecurity problem in Nigeria has increased investors’ apathy in the stock market as they prefer to stake their funds in the fixed market where there is some stability.
They maintained that the spate of insecurity in the country is having a multiplier effect on the stock market, adding that it is a major factor responsible for the lull being witnessed in the market currently.
According to them, though some of these stocks had remained attractive due to prolonged sell-off, the market has continued to witness low patronage from local investors while few foreigners are currently offloading their shares massively due to fear of losing their portfolios.
The market capitalisation which stood at N21.515 trillion as at January 5, 2021, when the market reopened for transactions for the year, dropped to N19.725 trillion as at close of trading on yesterday, representing N1.8 trillion loss while the All-Share Index plunged by 3,300.32 points or 9.0 per cent from 41,147.39 to 37,847.07.
The stakeholders insisted that if authorities fail to restore stability in the country, notwithstanding improved macroeconomic indicators, the soured state of the nation would erode the positive attributes of the macroeconomy with a the multiplier effect on the stock market.
The Founder, Independent Shareholders Association, Sir Sunny Nwosu said investors prefer to stake their funds in the fixed market where the interest rate is fixed and stable.
“Fund is leaving the market because of the current trend. A stock you bought through a rights issue at N42.00 is N23.00 today, so some people will want to have a fixed interest rate. For instance, if the interest rate is 10 per cent, you work on that and expect the 10 per cent gain, which is fixed than the capital market, which you are not sure about.
“Everything about the capital market is based on performance so they may be leaving. What is the capitalisation today, a little above N11 trillion, from over N15 trillion? This money is investors’ money and not the regulators.”
The President of Ibadan Zone shareholders Association, Eric Akinduro said since investment in shares is not immune from what is happening within the economy, investors have to access more stable instruments where the safety of investment is guaranteed.
He pointed out that the economy had suffered prolonged volatility, which has impacted negatively on the market.
“Our economy has been volatile and investors are not ‘father Xmas’. Any unfavourable instrument will always witness the migration of investors. For instance, foreign investors are always looking for a good environment and instruments to invest in.
“When it is otherwise, they move out to a better investment community. Even local investors are sceptical of what is happening. Until we get it right in this country, the economy will not improve.”
At the close of transactions yesterday, the market capitalisation of listed equities declined by 1.81 per cent to N19.725 trillion from N20.089 trillion it opened on Monday, while the All-Share Index also depreciated by 698.23 basis points to 37847.07 points from 38545.30 points traded the previous day.
Investors exchanged 218.271 million shares valued at N2.725 billion in 3524 deals against 209.212 million shares valued at N1.763 billion in 3390 deals.
Fidson Healthcare emerged as the day’s highest price gainer with 10.0 per cent to close at N5.06 kobo while Vitafoam Nigeria followed with a gain of 9.68 per cent to close at N13.60 kobo.
Redstarex added 9.55 per cent to close at N3.67 kobo. Veritas Capital appreciated by 9.09 per cent to close at N0.24 kobo. Courteville Business Solution also increased by five per cent to close at N0.21 kobo.
On the contrary, Airtel Africa Nigeria Plc topped the losers’ chart, declining by 10.00 to close at N678.00 kobo while Mutual Benefits Assurance trailed with a loss of 7.32 per cent to at N0.38 kobo.
Cornerstone Insurance depreciated by 7.27 per cent to close at N0.51 kobo. Learn Africa dipped by 6.48 per cent to close at N1.01 kobo. Ikeja Hotel fell by 6.19 per cent to N0.91 kobo.
Transnational Corporation of Nigeria (Transcorp) was the toast of investors during the day exchanging 42.441 million shares valued at N37.208 million,
Vitafoam Nigeria Plc followed with an account of 20.131 million shares cost N271.570 million, Dangote Sugar Refinery traded 17.633 million shares cost N312.104 million
FBNHoldings exchanged 12.391 million shares valued at N88.456 million while Access Bank sold 11.516 million shares worth N98.378 million.