Investors’ fortunes plummet by 16.15 per cent in 10 months

Weak corporate earnings and persistent low liquidity have propelled transactions in the month of October, the first month of the last quarter of 2019, to close on a downturn extending five consecutive months of bear run.

The development has caused investors’ wealth to depreciate further by 16.15 percent in 10 months. In the 22 trading sessions of October, the market was up in just five sessions, and down in 17 trading days, deepening the five months of loses and making the Nigerian bourse one of the worst-performing MSCI Frontier markets across the globe.

Analysts argued that the continued decline of the NSE’s benchmark All-Share Index (ASI) and the weak corporate earnings of listed companies released so far showed that the Nigerian economy is in dire need of an urgent stimulus that would revive the economy and bolster the capital market.

For instance, the 111 earnings reports made available to the investing public, all of 52 recorded lower profit, while 13 posted negative numbers for the period ended September 30, 2019. However, they expressed optimism that the current share prices reflect future earnings potentials, or profitability, even as the nation’s stock markets remains the leading indicators of economic activities.

The chief Research Officer of Investdata Consulting, Ambrose said the implementation of the 2019 budget has not reflected on the economy enough to complement the efforts of the monetary authorities.”The huge appropriation bills in all of these years have not strengthened our economic fundamentals to boost national output as a result of unclear economic policies.

“The low valuation of quoted companies, their fundamentals, may attract inflow to the Nigerian stock market, with many equities selling between their 52-week and five-year lows, offering higher upside potential,” he said. Codros Capital said: “In our view, the trend witnessed through the year is likely to persist through the final quarter of the year, although we expect pockets of gains over the final months of the year as fund and portfolio managers realign portfolios prior to the start of 2020.

“Nonetheless, we note that valuations remain attractive driven by price deterioration throughout the year. Hence, we advise that long-term investors consider appropriately timed investments.”Furthermore, for the month of the composite NSE’s ASI in the month lost a total of 1,275.20 basis points, closing at 26,355.35 after touching a high of 27,645.46bps and low of 26,113.88bps within the period, compared to the 27,630.56 at which it opened.

This represented a 4.84 percent decline over the period on strong selloffs that impacted negatively on stock prices, pushing them further down.
Total “sell” volume for the month was 84 percent, and ‘buy’ position, 16 per cent, further prolonging the bear-run in the last quarter, while volume index for the period was 0.67. Market capitalisation fell by N620.35 billion, closing lower at N12.83 trillion, from N13.45 trillion, representing a 4.84 percent value loss.

Traded volume for the period was up 17.10 per cent , at 4.93 billion shares, as against 4.21 billion its recorded in the preceding month. The ASI’s year-to-date loss stood at 16.15 whereas market capitalisation for the same period adjusted up to N1.13tr, representing a 9.68 per cent gain YTD from the opening value. Market breadth for the month was negative with the decliners outnumbering advancers in the ratio of 62:24 to extend the five months down market that was as a result of factors.