Stock market investors lose N1.37tn in seven months.
Investors in the nation’s stock market have lost a total of N1.3tn in seven months, as the total market capitalisation of equities listed on the Nigerian Stock Exchange dropped from N11.721tn at the beginning of the year to N10.347tn at the end of July.
The market capitalisation of equities (not including the market value of MTN Nigeria Communications Plc and Airtel Africa Plc), closed at N10.347tn on July 31, 2019, the last trading day of the month.
The stock market has sustained a bearish trend in the last two months, only recording meagre gains on days when investors embark on bargain hunting activities.
Despite analysts’ predictions that the stock market would witness a rally in the second half of the year, investors lost a total of N903bn in July, the first month of H2.
Analysts had hoped that the listing of two major telecommunications companies on the NSE would boost market performance, but the reverse was the case.
MTN listed its shares on May 16, driving the market capitalisation up to N12.526tn as it added N1.8tn to the total market capitalisation. The market capitalisation climbed further to N13.400tn on May 21 and N13.864tn on May 23, after which it started declining, dropping to as low as N13.048tn on June 26.
Airtel listed its shares on the NSE on July 9, adding N1.36tn to the total market capitalisation of the Exchange.
The stock market recorded gains on the day of the listing, after which it reverted to its bearish trend, with Airtel share price shedding 18 per cent in the two days following its listing.
The Group Chief Executive Officer, United Capital Plc, Mr Peter Ashade, said the initial euphoria around the listing of MTN and Airtel triggered a momentary rally in the market.
He noted that immediately the euphoria thinned out, the market reverted to its bearish position as foreign investors continued to snub equities due to deeper concerns about the policy framework of the government.
Ashade said, “In terms of what the Exchange can do to turn this around, we believe it needs to continue to encourage big-ticket listing like that of MTN and Airtel. The Exchange can also target huge non-listed entities such as DSTV, Shoprite, as operators in the rapidly growing digital economy to boost newer listings.
“To trigger a rally, we need to sort out concerns around multiple exchange rates, government revenue and other related issues to bolster interest in equities.”
On July 31, the equities market sustained its bearish performance in as sell pressures in Nigerian Breweries Plc, Nestlé Nigeria Plc and Dangote Sugar Refinery Plc dragged the benchmark index 37 basis points lower to settle at 27,745.92bps while the year-to-date return worsened to -11.8 per cent.
Accordingly, investors lost N50.7bn in value as the market capitalisation fell to N13.507tn.
Activity level improved as volume and value traded advanced by 62.3 per cent and 85.1 per cent to 251.930 million units and N4.129bn, respectively.
The top traded stocks by volume were Zenith Bank Plc (39.1 million units), FBN Holdings Plc (34.8 million units) and United Bank for Africa Plc (27.7 million units) while MTN Nigeria (N725.2m), Zenith Bank (N718.8m) and Dangote Cement Plc (N679.4m) led the top trades by value.
The insurance index gained the most, increasing by 0.9 per cent on the back of price appreciation in Wapic Insurance Plc, Mutual Benefits Assurance Plc and Prestige Assurance Plc.
The banking and industrial goods indices also gained 0.7 per cent and 0.3 per cent, respectively, due to major buying interest in Access Bank Plc, UBA, FBN Holdings and Cement Company of Northern Nigeria Plc.
The consumer goods index depreciated by 3.5 per cent due to major losses recorded in Nigerian Breweries, Nestlé and Dangote Sugar.
The oil and gas index lost two basis points due to sell-offs in Oando Plc and Conoil Plc.
Investor sentiment strengthened to 1.0x from 0.6x recorded on Tuesday as 20 stocks advanced relative to 20 stocks that declined.
The top outperforming stocks were Julius Berger Nigeria Plc, Forte Oil Plc, Mutual Benefits, Wapic Insurance and Jaiz Bank Plc, which gained 9.87 per cent, 9.17 per cent, 9.09 per cent, 7.69 per cent and 7.14 per cent, respectively.
The top five losers were University Press Plc, Berger Paints Plc, Dangote Sugar, Eterna Plc and Nigerian Breweries, whose respective share prices declined by 10 per cent, 9.52 per cent, 9.26 per cent, 9.09 per cent and 9.09 per cent.
Analysts at Afrinvest Securities Limited said they expected the bearish performance to be sustained till the close of the week as investors’ sentiment towards equities remained weak.