Investors in companies quoted on the nation’s stock market recorded a loss of about N1.764 trillion in ten trading days of the New Year following sell pressure that have persisted in the equities market.
As at Friday, the market capitalisation of the Nigerian Stock Exchange (NSE), which gauges the value of listed stocks, stood at N8.086 trillion as against the opening figure of N9.850 trillion recorded at the close of trading in December 31, 2015, accounting for a loss of N1.764 trillion or 17.90 per cent.
A further breakdown of the decline revealed that the market recorded a loss of N93 billion each on January 4 and 5. The stock market further dropped by N317 billion on January 6. It, however, became bullish on Thursday, January 7, with a gain of N30 billion, being the only day investors got respite.
The stock market reverted to a loss position with N82 billion on January 8, while it shed N233 billion on January 11, N109 billion on January 12 and N320 billion on January 13. Despite the last two days of 2015 witnessing unprecedented bullish rally with a gain of N649 billion, low sentiments in the market worsened following upset from drop in oil price, insecurity, 2015 elections and recapitalisation, among others.
Trading activities at the Nigerian Stock Exchange on Friday sustained a negative trend with the market capitalisation dropping by N250 billion.
The NSE All Share index dipped by 725.94 points or 3.0 per cent to close at 23,514.04 points from 24,239.98 points recorded on Thursday. The volume of shares traded increased by 81.57 per cent due to sales pressure, with an exchange of 476.65 million shares valued N6.16 billion transacted in 4,448 deals.
This was in contrast with 262.52 million shares worth N2.41 billion exchanged in 2,579 deals on Thursday.
Reacting, the NSE’s chief executive officer, Oscar Onyema, said the market trend was a reflection of the nation’s economic condition.
“The market is reflecting what is going on in the real economy,” Mr. Onyema said.
Financial analysts believe that some of these factors sent shock waves to both local and foreign investors and created uncertainty in the investment environment, which led to a retreat on the part of bargain hunters.
Foreign investors have continued to offload Nigerian stocks as equities fell 3.6 per cent on Wednesday to near a three-and-half-year low after reports that naira hit a new trough of N300 to a dollar at the black market, weighed down by sliding oil prices and the central bank’s decision to curb dollar supply to Bureau de Change (BDC) operators.
The Central Bank of Nigeria last week lifted a ban on dollar cash deposits, ending a six-month embargo on banks from receiving dollar deposits from customers, and stopped selling foreign currency to money changers in an effort to maintain its reserves.
“The CBN will only supply the banks with an amount equivalent to the foreign exchange accruing at the CBN to finance priority imports, currently equivalent to about $1 billion per month,” JF Ruhashyankiko, an economist at Goldman Sachs Group Inc. in London, said in a January 12 note.
“As a result, and contrary to the consensus expectation of a devaluation in the first quarter of 2016, a further decline in oil prices is likely to translate into lower dollar supply to banks and a higher shadow exchange rate rather than a devaluation.”
The plunge in oil price has put Nigeria’s currency under pressure and dampened appetite for assets in Africa’s biggest economy and chief oil exporter, prompting the central bank to intervene repeatedly to prop up the local currency. The fall in the price of crude oil in the international market is sending economic and political shocks around the world.
Source: Daily Independent