Coronavirus, Political Instability Sustain Sell-Off At NSE

Sell pressure continued at the Nigerian Stock Exchange (NSE), amid negative sentiments fuelled by the rise in Coronavirus pandemic, exacerbated by the political crisis that has engulfed Nigerias ruling All Progressives Congress (APC), and wobbling economic data.

Although the NSE All-share index and market capitalisation appreciated marginally by 0.01 per cent to close the week at 24,829.02 and N12.952 trillion, respectively, market indicators plunged successively in four out of five trading days last week.

More so, all other indices finished lower with the exception of NSE-Main Board, NSE MERI Value, and NSE Lotus II Indices, which appreciated by 0.63 per cent, 0.41 per cent, and 0.26 per cent correspondingly, while NSE ASeM and NSE Consumer Goods closed flat.

A look at the market performance last week showed that losses suffered by most blue-chip stocks, especially Neimeth Pharmaceuticals, and Cutix, caused the local bourse to extend losing streak during Monday transactions, causing the market capitalisation to slip further by N38 billion.

The All-Share Index (ASI) fell by 72.83 absolute points or 0.29 per cent to close at 24,753.92 points. Similarly, the market capitalisation of listed equities shed N38 billion to close at N12.913 trillion.

Similarly, sell-offs in high cap stocks, transactions at the NSE continued southward on Tuesday, causing the ASI to contract by 3.86 absolute points, a 0.02 per cent fall to close at 24,750.06 points. Similarly, the overall market capitalisation shed N2 billion to close at N12.911 trillion.

The downturn was impacted by losses recorded in medium and large value stocks, including Dangote Sugar Refinery, Nigerian Breweries, PZ Cussons Nigeria, Ecobank Transnational Incorporated (ETI) and Lafarge Africa

The losing streak was extended on Wednesday as sell-offs in 22 stocks dragged the index further by 0.38 per cent.

At the close of trading, the ASI fell by 95.01 absolute points or 0.38 per cent to close at 24,655.05 points, while the overall market capitalisation shed N49 billion to close at N12.862 trillion.

The downturn was occasioned by losses recorded in large and medium value stocks, including Seplat Petroleum Development Company, Guinness Nigeria, Nigerian Breweries, GlaxoSmithKline Consumer Nigeria, and PZ Cussons Nigeria

The weak sentiments persisted on Thursday, as more blue-chip stocks suffered a price fall, causing investors to lose N68 billion in four trading days.

Specifically, the market capitalisation, which opened at N12.913 trillion on Monday, dropped to N12.845 trillion on Thursday, shedding N68 billion, while the ASI slipped by 128.68 or 0.5 per cent from 24,753.92 points to 24,625.24.

Thursdays downturn was impacted by losses recorded in large and medium value stocks, amongst which were; MTN Nigeria Communications (MTNN), Zenith Bank, Linkage Assurance, FBN Holdings (FBNH), and Japaul Oil and Maritime Services.

However, at the close of transactions on Friday, the All-Share index advanced by 0.83 per cent. 14 stocks posted gains while 13 stocks declined.

The persistent fall in market activity and the continued negative trend reflect cautious trading among investors, as they factored in the expected Q2 earnings reports, which are likely to be disappointing as a result of the virus-induced economic downturn and lockdown.

Analysts at Codros capital said: In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks.

Afrinvest capital said: The coming week, we expect to see sustained profit-taking in early trade; however, we believe this negative trend would be reversed before the end of the week on account of bargain hunting by investors.

Further analysis of last weeks trading showed that a total turnover of 739.375 million shares worth N8.563 billion was recorded in 17,248 deals by investors on the floor of the Exchange, in contrast to 1.050 billion shares valued at N10.125 billion that exchanged hands in 19,576 deals during the previous week.

The financial services industry (measured by volume) led the activity chart with 457.851 million shares worth N3.773 billion traded in 8,062 deals; thus contributing 61.92 per cent to the total equity turnover volume.

The consumer goods sector followed with 66.668 million shares worth N2.015 billion in 3,486 deals. The third place was the oil and gas industry, with a turnover of 63.255 million shares worth N380.146 million in 963 deals.

Trading in top three equities namely FBN Holdings Plc, Guaranty Trust Bank Plc, and Zenith Bank Plc. (measured by volume) accounted for 211.351 million shares worth N3.042 billion in 3,623 deals, contributing 28.59 per cent to the total equity turnover.

A total of 199,011 units valued at N1.525 billion were traded this week in 13 deals, compared with 121,769 units worth N675.284 million transacted last week in 22 deals.

More so, 9,284 units of bonds valued at N10.180 million were recorded in eight deals compared with a total of 11,920 units worth N12.265 million transacted last week in 18 deals.

About 18 equities appreciated at price during the week, higher than 14 in the previous week, while 43 equities fell, lower than 47 a week ago. Also, 102 equities remained unchanged, from the previous week.

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