Stock market sheds N1.5trn in eight months

Investors in the nation’s stock market have lost a total of N1.52tn in eight months, as the total market capitalisation of equities listed on the Nigerian Stock Exchange dropped from N11.721 trillion at the beginning of the year to N10.200tn at the end of August.

The market capitalisation of equities (not including the market value of MTN Nigeria Communications Plc and Airtel Africa Plc), closed at N10.200tn on August 30, 2019, the last trading day of the month.

The stock market had sustained a bearish trend in the last three months, only recording meagre gains on days when investors embarked 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, and N131bn in August.

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 market capitalisation, which opened at N13.508tn at the end of July, increased to N13.522tn at the beginning of August, then dropped to its lowest level at N13.121tn on August 16.

The market attained its highest point on August 23 at a market capitalisation of N13.524tn.

At the end of the last trading week in the month, the All Share Index dipped by 99 basis points week-on-week as loses in large cap stocks drove the tide of the market.

Profit taking on stocks, which had gained in the previous week, drove the market down.

The Oil and Gas sector was hit particularly hard last week, shedding 10.76 per cent, dragged by declines in Seplat Petroleum Development Company Plc and Total Nigeria Plc.

Stocks in the banking sector returned to negative trading, causing the sector to shed 346bps week-on-week.

Losses in Unilever Nigeria Plc weighed on the consumer goods sector, which shed 63bps week-on-week, while gains by cement players, drove the industrial goods sector up 34bps despite Dangote Cement Plc shedding 270bps.

Market turnover increased by 26 per cent to N13.232bn at the end of the week.

The ASI closed in the red last week as sell pressure dominated most trading sessions on the back of capital appreciation.

Analysts at Vetiva Capital Management Limited said in the absence of any positive catalyst, they expected the equities market to remain pressured this week.