Investors lose 1.7 per cent in five-day bearish trading
The free fall of equities on the Nigerian Stock Exchange (NSE) worsened at the close of transactions last week, as the benchmark All-Share Index (ASI) recorded five consecutive days of losses, breaking down its October 3, 2019, strong support level of 26,789.38 basis points.
The development resulted in the depreciation of both ASI and market capitalisation by 1.7 per cent to close the week at 26,533.78 points and N12.917 trillion respectively.
Similarly, all other indices finished lower with the exception of NSE Banking and NSE AFR Div Yield Indices, which appreciated by 0.14% and 1.81% respectively, while the NSE ASeM index closed flat.
In the process, the exchange made new lower lows on persisted selloffs in high cap stocks despite the oncoming earnings reporting season.
For instance, at the end of transactions last week Monday, there was a sustained bearish sentiment for the six consecutive trading sessions, as more blue-chip stocks depreciated in price, resulting in a further loss in the All Share Index (ASI) by 0.21 per cent.
Precisely, the ASI shed 56.49 absolute points, representing a decline of 0.21 per cent to close at 26,809.92 points. Similarly, the market capitalisation lost N27 billion, to close at N13.051 trillion.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; MTN Nigeria, Guinness Nigeria, Dangote Sugar Refinery, Dangote Flour Mills and Champion Breweries
Again, on Wednesday, sell-off in high-cap stocks depressed the market further, resulting in a decline in market capitalisation by N103 billion.
The ASI fell by 210.98 points or 0.79 per cent to 26,598.94 points. Accordingly, investors lost N103 billion in value as market capitalisation declined to N12.948 trillion.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Nestle Nigeria, Dangote Cement, Guinness Nigeria, Nigerian Breweries and Presco.
The bearish sentiment persisted at the close of transactions on Thursday and Friday. Precisely, at the end of Thursday’s transactions, 15 stocks dragged the All-Share Index (ASI) further by 0.06 per cent.
Specifically, the ASI fell by 15.19 points or 0.06 per cent to 26,583.75 points. Accordingly, investors lost N7 billion in value as market capitalisation declined to N12.941 trillion.
Thursday’s downturn was impacted by losses recorded in medium and large capitalised stocks, among which were Custodian Investment, Flour Mill Nigeria, Ecobank Transnational Incorporated (ETI), United Bank for Africa (UBA) and Fidson Healthcare.
Analysts noted that the stock market experienced losses on negative sentiments and selloffs as revealed by trade patterns.
The market recorded a 52-week loss confirming the bearish state of the general market, with more stocks, including bellwether stocks- Dangote Cement, Nigerian Breweries, Presco, Guinness and AXA Mansard Insurance, making new 52-week lows.
When measured from the beginning of 2019, till now, stocks have suffered serious losses, shedding close to 20 per cent for the year.
Last week’s sell-off was triggered by bearish minded institutional and fund managers selling down their positions due to the nation’s weakening economic fundamentals and divergence in monetary and fiscal policy formulation.
Furthermore, the manufacturing companies made new lows due to indecision among investors, arising from their unimpressive earnings reports before now.
Moreso, the declining investor confidence has become even stronger, with the negative sentiments that dominate trades in recent days in the absence of positive news and policy statement from the government or its agencies.
Market players are currently concerned over the slow implementation of the 2019 budget, a situation that has affected the economy with a multiplier effect on the stock market.
In his reaction on market performance, the Chief Research Officer of Inveatdata Consulting Limited, Ambrose Omodion, urged discerning investors to leverage the low price of equities, as a way of averaging down and recouping their investment immediately recovery stage sets in.
“We note that all eyes are on the newly appointed economic advisory team to settle down quickly and begin churning out policies capable of turning things around,” he said.
Also, Codros Capital Limited said: “In our view, the trend witnessed through 2019 so far is likely to persist through Q4-19.
“Although we expect pockets of gains over the last few weeks of the year as fund and portfolio managers realign portfolios prior to the start of 2020. “Consequently, we advise investors to tread the cautious trading path over the short term.”