Trading remains bearish as sell-down gains momentum

Cross-border trading debuts between Nigerian, Ghana bourses

The equities market closed yesterday on a negative note, as Nigerian Stock Exchange [NSE] All Share Index [ASI] depreciated by 0.61 per cent to close at 29,828.95 basis points, compared with the 0. 05 per cent depreciation recorded previously. Its Year-to-Date (YTD) returns currently stands at 13.93 per cent.

Market breadth also closed negative as Wema Bank led 10 gainers against 26 losers topped by Oando at the end of yesterday’s session- an unimproved performance when compared with previous outlook.

Market turnover however closed positive as volume moved up by 158.33 per cent against 50.01 per cent decline recorded in the previous session. Zenith Bank, FBNH and Diamond Bank were the most active to boost market turnover. Wapco and Zenith Bank topped market value list.

Volume shockers included Nascon which the list of active stocks that recorded impressive volume spike at the end of yesterday’s session.

Meanwhile, cross-exchange trading has debut between Ghana and Nigeria Exchanges. The trade was one of the first examples of cross-border trading, where a broker in Ghana was able to buy shares on the Nigerian Stock Exchange through links with a Nigerian broker.

It points the way for closer capital market integration in West Africa, where economic links are already strong.

The trade was executed by Ghana’s CAL Brokers Ltd and Nigeria’s United Capital Securities Ltd. CAL Brokers bought 100 Dangote Cement and 6,000 Guaranty Trust Bank shares from United Capital Securities. It bought the shares for its own portfolio to sell later, paying commission and money transfer costs.

A research analyst at CAL, Geoffrey Maison said that investors can now tap into bigger pool of funds. According to him, investors from Ghana can look out for opportunities on the Nigerian Stock Exchange if they can’t get stocks to buy here.

The Deputy Group CEO/ Managing Director, Investment Banking at United Capital PLC Wole Shonibare, stated: ‘’With signed memoranda of understanding (MOU) (recognized by each regulator in the two jurisdictions) in place, Ghana and Nigerian dealing members (broker-dealers) were able to trade among themselves via Sponsored Access’’.

According to Shonibare, this landmark transaction is important and beneficial to West Africa and the African financial markets in many ways. Liberalizing capital transactions across any region is the first step for integrated capital markets.

‘’Over the years, African financial markets have been left vulnerable to volatility resulting from massive portfolio inflows from countries that share little economic similarities with the region, causing a significant bout of macroeconomic instability in the domestic financial markets. The Ghana-Nigeria deal is expected to be a precursor to greater capital flows within a sub-region that already operates a liberalized trade environment’’, he said.