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Weak sentiments persist on equities market amid rising cases of COVID-19 crisis

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Acting DG SEC,Mary Uduk

.As operators seek speedy execution of stimulus packages to stem prevalence
As the COVID-19 crisis continue to take toll on the global and domestic economy with rising new cases of the virus involving prominent government officials, weak sentiments continued to dominate the equities market, even as medium and high cap stocks hit new lows.

Despite pocket of gains recorded in three trading sessions last week, the NSE All-share index and market capitalisation depreciated by 1.52 per cent to close the week at 21,861.78 and N11.393 trillion respectively.

Similarly, all other indices finished lower with the exception of NSE Banking, NSE Insurance, which appreciated by 2.06 per cent, 3.25 per cent, 3.47 per cent and 2.93 per cent while NSE ASeM Index closed flat.

Analysis of market performance during the week, showed that market began the trading week onwith a decline of 2.24 per cent due to price depreciation in high capitalised stocks.

The All-Share Index (ASI) decreased by 497.45 absolute points, representing a dip of 2.24 per cent to close at 21,700.98 points. Similarly, the overall market capitalisation size shed N259 billion to close at N11.309 trillion

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Nigerian Breweries, Stanbic IBTC Holdings, Guaranty Trust Bank, Zenith Bank and Unilever Nigeria.

Market breadth closed negative, with nine gainers versus 25 losers. Neimeth International Pharmaceuticals recorded the highest price gain of 10 per cent, to close at 44 kobo, per share. May and Baker Nigeria followed with a gain 8.94 per cent to close at N1.95, while Custodian Investment rose by 8.65 per cent, to close N5.65, per share.

Flour Mill of Nigeria went up by 7.77 per cent to close at N20.80, while Chemical and Allied Products (CAP) rose by 7.69 per cent to close at N21.00, per share.

On the other hand, Dangote Sugar Refinery, Nigerian Breweries, Stanbic IBTC Holdings, United Bank for Africa (UBA) and Wema Bank led the losers’ chart by 10 per cent each, to close at N9.00, N27.00, N23.85, N4.50 and 45 kobo, respectively per share. United Capital followed with a decline of 9.96 per cent to close at N2.17 per share.

Guaranty Trust Bank fell by 9.95 per cent to close at N16.75, per share. Lafarge Africa went down by 9.90 to close at N9.10, while Unilever Nigeria shed 9.87 per cent, to close at N10.50, per share.

Surprisingly, at the close of transactions on Tuesday, the ASI increased by 40.18 absolute points, representing a growth of 0.19 per cent to close at 21,741.16 points. Similarly, the market capitalisation gained N21 billion to close at N11.330 trillion.

The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Stanbic IBTC Holdings, Chemical and Allied Products (CAP), Custodian Investment, Zenith Bank and Skyway Aviation Handling Company.

Market breath closed positive, recording 19 gainers and 10 losers. NPF Micro Finance Bank recorded the highest price gain of 9.52 per cent, to close at N1.15, per share. Stanbic IBTC Holdings followed with a gain 9.43 per cent to close at N26.10, while Transnational Corporation of Nigeria (Transcorp) appreciated by 8.93 per cent to close at 61 kobo, per share.

Jaiz Bank went up by 8.89 per cent to close at 49 kobo, while Skyway Aviation Handling Company appreciated by 8.66 per cent to close at N2.51, per share. On the other hand, Caverton Offshore Support Group led the losers’ chart by 10 per cent, to close at N2.25, per share. Conoil followed with a decline of 9.93 per cent to close at N13.15, while NASCON Allied Industries (NASCON) went down by 9.57 to close at N8.50, per share.

Ecobank Transnational Incorporated (ETI) shed 8.99 per cent to close at N4.05, while Cadbury Nigeria depreciated by 8.85 per cent to close at N5.15, per share.

Further breakdown of lastweek’s trading showed that the Nigerian Stock Exchange (NSE), reversed Tuesday gains to close on a downturn on Wednesday , causing the All Share Index (ASI) to slump by 0.05 per cent.

Specifically, the ASI depreciated by 11.68 points or 0.05 per cent to 21,729.48 points. Accordingly, investors lost N6 billion in value as market capitalisation declined to N11.324 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Total Nigeria, MTN Nigeria, Africa Prudential, FCMB Group and GlaxoSmithKline Consumer Nigeria.

Gains recorded by some financial stocks, especially Guaranty Trust Bank (GTB) and Union Bank of Nigeria (UBN), y lifted market capitalisation by N15 billion on Thursday.

Precisely, theAll Share Index (ASI) of the Nigerian Stock Exchange (NSE) rose by 27.99 points or 0.13 per cent to 21,757.47 points. Accordingly, investors gained N15 billion in value as market capitalisation went up to N11.339 trillion.

Unfortunately, the seemingly improved buying interest in financial services stocks, consumer and industrial goods last week failed to push the market indices as selloffs in large company shares dragged the key performance index down

There is also the effects of the remote trading, following the closure of the trading floor as a safety measure in the wake of the ravaging Coronavirus pandemic that has made governments shut down non-essential services across the globe.

Many stockbroking firms and their clients, especially those that have not perfected the act of remote trading, are struggling to execute trades from remote platforms, due to either inefficiency of their platforms, or a failure to give real online trading education to their clients before now.

In the midst of the wobbling economic situation and fear of the diseases triggering a major economic crisis, analysts and operators at the weekend, urged federal government to step up implementation of policies already identified as measures capable stemming the effects of the pandemic and monitor implementation.

The stakeholders categorically stated that news of stimulus packages and expected implementation in other nations of the world have started reflecting on their stock markets that just suffered huge losses as it rebounded with big gains in recent days trading.

Specifically, the Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion said: ”

“It is expected that, at this challenging period for the economy, the government and her economic managers would step up implementation of policies and measures already identified among those that can counter the effects of the pandemic.

“The news of stimulus packages and expected implementation in other nations of the world have started reflecting on their stock markets which just suffered huge losses as it rebounded with big gains in recent days trading.

He added: “The current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation in the New Year.”

Analyst at Afrinvest Research said: “Performance across the developed markets was positive across board. In the US markets, the S&P 500 and NASDAQ advanced 10.7 percent and 10.2 per cent w/w respectively following rounds of economic stimulus provided by the US government.

“Likewise, Hong Kong’s Hang Seng and Japan’s Nikkei 225 indices gained 3.0 per cent and 17.1 per cent w/w respectively on economic relief hopes while the UK’s FTSE All-Share index advanced 5.7 per cent w/w.

“Germany’s XETRA DAX and France’s CAC 40 indices appreciated 7.8 per cent and 6.8 per cent w/w respectively after the ECB announced its plan to scrap limits on bond purchases for its emergency program.

” In the BRICS market, performance was bullish as 4 of 5 Indices under our coverage trended higher. Brazil’s Ibovespa index led the gainers, up 11.5 per cent w/w, while South Africa’s FTSE/JSE All share index closely followed with a 6.6 per cent rise w/w.

“In Russia, the RTS index gained 3.9 per cent w/w while China’s Shanghai Composite advanced 1.0 per cent w/w. Lastly, India’s BSE Sens was the only loser, down 0.3 per cent as investors reacted negatively to the shutdown of business activities.”

“We believe that the domestic market would continue on a downtrend due to a weak and uncertain economic environment.”

Furthermore, a turnover of 1.452 billion shares worth N14.918 billion was recorded in 21,828 deals by investors on the floor of the Exchange, in contrast to a total of 2.804 billion shares valued at N32.559 billion that was exchanged in 31,715 deals during the preceding week.

The financial services industry (measured by volume) led the activity chart with 1.224 billion shares valued at N10.590 billion traded in 14,944 deals; thus contributing 84.32 per cent to the total equity turnover volume.

The conglomerates followed with 50.261 million shares worth N61.457 million in 442 deals. The third place was the consumer goods industry, with a turnover of 47.276 million shares worth N2.509 billion in 2,225 deals.

Trading in the top three equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and FBN Holdings Plc (measured by volume) accounted for 713.795 million shares worth N8.610 billion in 8,608 deals, contributing 49.18 per cent to the total equity turnover.

Also, a total of 20 units valued at N130.90 were traded this week in 2 deals, compared with a total of 15,121 units valued at N87.766 million transacted last week in seven deals.

A total of 28,527 units of Federal Government Bonds valued at N29.950 million were traded this week in 18 deals, compared with a total of 16,204 units valued at N19.101 million transacted last week in eight deals.


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