Nigeria’s Stock Market Loses N908 Billion in One Week

Kunle Aderinokun

Activities on the trading floors of the Nigerian Stock Exchange dropped by N908 billion or 6.38 per cent last Friday as the NSE All-Share Index and market capitalisation closed the week at 36,816.29 and N13.336 trillion, respectively. Apart from the NSE ASeM Index, which closed flat, all other indices finished lower.

The NSE All-Share Index (which dropped to a six-month low) and market capitalisation fell further from the 39,323.62 and N14.244 trillion, respectively, which they depreciated to, having recorded 2.84 per cent loss the previous Friday.

The weekly report from the stock exchange revealed that 25 equities appreciated in price during the week, which is higher than 14 of the previous week. On the other hand, 48 equities depreciated in price, lower than 61 equities that lost the previous week. Ninety-six equities, however, remained unchanged, in contrast to the 94 that maintained their positions in the preceding week.

Trading sessions on the floors of the exchange only held for four days of the review week because of the May 29 public holiday declared to mark the Democracy Day celebration.

Further analysis showed that a total turnover of 2.699 billion shares worth N84.775 billion in 19,715 deals were traded this week by investors on the floors of the exchange, in contrast to a total of 1.372 billion shares valued at N16.022 billion that exchanged hands last week in 21,099 deals.

The Financial Services Industry (measured by volume) led the activity chart with 2.451 billion shares valued at N78.417 billion, traded in 11,403 deals; thus, contributing 90.84 per cent and 92.50 per cent to the total equity turnover volume and value, respectively.

The Conglomerates Industry followed with 76.845 million shares worth N126.358 million in 835 deals. The third place was occupied by Consumer Goods Industry with a turnover of 64.437 million shares worth N4.427 billion in 3,491 deals.

Trading in the top three equities, namely, Stanbic IBTC Holdings Plc, Access Bank Plc and Zenith Bank International Plc (measured by volume), accounted for 1.626 billion shares worth N70.285 billion in 2,882 deals, contributing 60.23 per cent and 82.91per cent to the total equity turnover volume and value, respectively.

Also traded during the week were a total of 22,080 units of Exchange Traded Products (ETPs) valued at N393, 726.30, executed in 10 deals, compared with a total of 70 units valued at N1, 943.00 that was transacted last week in seven deals.

For bonds, a total of 6,433 units of federal government bonds valued at N6.599 million were traded this week in 12 deals, compared with a total of 10,754 units valued at N11.412 million transacted last week in five deals.
In its analysis, Afrinvest had attributed the downward movement of the market to the continued profit-taking activities of domestic and foreign investors in the equities market.

According to Afrinvest, “The weak performance of the domestic bourse was sustained all through May as investors continued to sell off on market bellwethers. Hence the All Share Index (ASI) fell 7.7 per cent in May (the largest monthly loss since January 2016). This performance is largely in line with the trend across emerging market equity indices as foreign investors continue to exit these markets.

“Last week, the All Share Index fell below the 40, 000.00 points mark for first time since January and during the week, fell to a 6-month low of 36,816.29 points.

“Accordingly, the NSE ASI declined for the sixth consecutive week, falling 6.4 per cent W-o-W while YTD performance turned negative, settling at –3.7 per cent. Similarly, Market capitalization fell by N908.2bn to N13.3tn. Activity level strengthened this week, albeit largely characterized by selling activity as average volume and value traded grew 42.1 per cent and 82.9 per cent to 389.3m units and N5.9bn respectively. Access (248.3m units), Zenith (227.5m units) and UBA (156.6m units) were the top traded by volume while Zenith (N5.9bn), Guaranty (N5.1bn) and Access (N2.7bn) were the top traded by value.”

Afrinvest also noted, “The bearish run in the equities market extended into the 11th consecutive trading session this week, the longest losing streak since July 2015, as the All Share Index declined on all trading days in the week. Accordingly, the benchmark index slid 1.0 per cent on Monday, 0.7 per cent on Tuesday, 1.1 per cent on Wednesday, 1.3 per cent on Thursday and eventually closed Friday, down 3.4 per cent. During the week, the major drag to performance were losses in market bellwethers –DangCem (-8.6per cent), Nestle (-10.6 per cent), Nigerian Breweries (-10.7 per cent), Guaranty (-7.9 per cent) and Zenith (-4.3 per cent).”

The NSE Chief Executive Officer, Oscar Onyema, in his opening remarks at the 5th NSE/LESG Dual Listing Conference at the weekend, acknowledged that it had been challenging for the capital market owing to factors including slump in commodity prices, global economic slowdown, 2015 general elections, recession and the hitherto illiquidity in the FX market.

“Over the last few years, Nigeria’s economic landscape has been particularly challenging for the capital market. The combined effects of the 2015 national elections, slump in commodity prices, global economic slowdown, recession and FX market illiquidity have resulted in a dearth of Initial Public Offers (IPOs) in the Nigerian capital market. Between 2014 and 2016, capital raised on the NSE fell by c.95 per cent, from N43.95 billion to N2.59 billion,” Onyema stated.

Onyema, however, added, “In 2017 we saw a significant rebound as listing activity (IPO and follow on offers) increased 1,622.03 per cent from N2.59 billion in 2016 to N44.51 Billion in 2017. The Nigerian capital market is not peculiar in this regard. Global listing activity (IPOs and Follow-On offers) in 2017 came to c.US$818 billion (from 1,483 IPOs and 3,529 FOs) a rebound of 17.99 per cent from a 22.32 per cent dip in 2016.

“African Equity Capital Markets (ECM) recorded an increase in volume and value in 2017 with 49 per cent growth in total ECM transaction value and 17 per cent growth in IPO volumes from the 2016 four-year low. Market recovery was largely driven by South Africa, with contribution from Egypt, Tunisia and renewed listing activity in Namibia.”
The chief executive, however, added, “The global outlook for 2018 remains positive on the basis of resilience in the US, economic stability in Europe, and significant increases in market activity of emerging economies.

“Primary markets activities on the NSE in 2018 have not continued the pace of resurgence we saw in 2017, although the pipeline remains strong. The 2017 primary markets activities were dominated mostly by supplementary offers, listings by introduction, debt issuances, mergers and divestments. The market recorded an uptick as equity market capitalisation grew by 42.12 per cent in 2017 closing the year at N13.62 trillion compared to N9.54 trillion in 2016. With these feats, The NSE emerged the star of Sub-Saharan Africa markets and one of the top three best performing World Federation of Exchanges’ markets of 2017 globally.”

Pointing out that capital markets were critical to sustainability of growth and development in the economy, Onyema said, “It is my strong belief that one of the things that Nigeria (and Africa) needs to sustain its growth is a solid and vibrant capital market ecosystem that will attract investment and unlock the potential that exists in the economy.

“Just yesterday (Thursday), the NSE ASI witnessed a reversal of all the gains made in 2018 and is currently down 0.36 per cent. Since the market is a leading indicator, we cannot take our eyes off the ball and must continue to press for positive catalysts that will propel the economy to new heights.”