Nigerian Stock Exchange (NSE) ended the week on a bearish note as all-share index (ASI) and market capitalisation dipped 2.49 percent week-on-week (W/W) to 31,726.26 points and N10.836 trillion respectively, the NSE said in its weekly stock market report.
“Similarly, all the Indices finished lower during the week, with the exception of NSE Insurance Index that closed higher by 1.26 percent,” NSE reported.
On its part, analyst weekly market update reported the week’s loss at the Nigerian equities market is the lowest value since March 30th and its worst w/w performance since March 23rd.
The update says the loss increased the negative return for the month of July – which is yet to record a positive session to a negative 5.16 percent, while the Year-to-Date Y-t-D) loss rose to 8.45 percent.
NSE reported a turnover of 1.264 billion shares worth N15.770 billion in 17,016 deals were traded this week by investors on the its bourse compared a total of 1.269 billion shares valued at N17.570 billion that exchanged hands in the previous week in 18,993 deals.
According to the Nigeria’s Exchange, the Financial Services Industry (measured by volume) led the activity chart with 831.925 million shares valued at N8.924 billion traded in 9,602 deals; thus contributing 65.81 percent and 56.59 percent to the total equity turnover volume and value respectively.
It affirmed that the Natural Resources Industry followed with a turnover of 210.046 million shares worth N105.218 million in 14 deals. While, the third position was occupied by Oil and Gas Industry with 59.600 million shares worth N1.418 billion in 1,632deals.
Transactions in the shares top three (3) equities which include lenders, Zenith Bank Plc, Access Bank Plc and Multiverse Plc (measured by volume) accounted for 604.019 million shares worth N5.590 billion in 2,322 deals, contributing 47.78 percent and 35.45 percent to the total equity turnover volume and value respectively, the NSE added.
A summary of price changes in the review period at the close of business on the Nigerian bourse shows that 19 equities gained in price during the week, lower than 33 the past week. On the contrary, 50 equities lost in price higher than 36 of the preceding week, while 124 equities remained unchanged, the same figure reported the previous week.
Expectations by some market watchers that the peaceful general elections and subsequent smooth handover to a new government would drive investors’ optimism to galvanise stock market activities during the second quarter of the year was dashed by the bearish trends that characterised local bourse in the first half of 2015. The nation’s capital market had responded positively after elections, surging 20 per cent between March 20 and April 13, following the euphoria and excitement that greeted the successful general elections.
However, despite the expectations ahead of the release of half-year corporate results of quoted companies, the market had sustained depression since the inauguration of the new government, as investors continue to eagerly wait for President Muhammadu Buhari to make necessary appointments and unveil the economic direction of his administration. The Nigerian Stock Exchange (NSE), taking a cue from market downturn in 2014, began the 2015 financial year on an unfavourable note with key measurement indicators tilting southwards to finish the second quarter with a loss of 3.46 per cent in market performance indices. The NSE’s market capitalisation depreciated by N56 billion to close at N1.421 trillion at the close of business by the end of second quarter (June 30) from N11.477 trillion opening figure at the beginning of trading in January.
The NSE All Shares Index dropped by 3.46 per cent or 1200.32 basis points for the period under review; from 34,657.15 points it opened during the beginning of trading, to close at 33,456.83 points. The NSE Index hit its 2015 peak of 35,728.12 on April 2, the day after Buhari was declared the election winner. Since then it has fallen eight per cent The index measures the performance of the stock market and also reflects how prices of stocks have moved, which in turn determines how much an investor gained or lost.
Foreign and domestic investors had, during the first half of the year, sold off Nigerian stocks due to the fears created by the 2015 general election tensions and fall in the prices of crude at the international markets. The tension between the Peoples Democratic Party (PDP) and its major opposition, the All Progressive Congress (APC) led to a lull in the equities market as investors, mostly foreign, evaluated the electoral process and its outcome. Besides, Foreign Portfolio Investments (FPI) remained wary of the local bourse until the elections were concluded and possible violent fall outs curbed.
However, with the elections over and smooth handover to President Buhari, market watchers expected that these would herald a bullish market, but the reverse has being the case. Added to these, is the delay by the new administration of Buhari to name ministers and other officials who will give clear policy direction of the economy.
This had cost investors on the Exchange about N237 billion during the last month of the first half of the year Investors had been particularly wary of the outlook for Nigeria, Africa’s largest economy and the world’s number four oil producer. Global benchmark oil prices have fallen more than 50 per cent in recent months, diminishing the value of Nigeria’s currency and leaving a gaping hole in government revenue. This necessitated the revising of the projected economic growth rate of Nigeria by the World Bank in 2015 from 6.3 per cent to 5.5 per cent.
Chief Executive Officer, Financial Derivatives Companies (FDC) Limited, Mr. Bismark Rewane, said that the downturn in the nation’s capital market was sustained because of the challenging economic outlook, which has continued to fuel negative sentiments on the capital market. Reviewing the stock market at the end of June, analysts at FBN Capital said: “Both Lagos and Nairobi stock markets have declined this year by -4.1 per cent and -5.4 per cent ytd respectively, whereas the more liquid and far larger Johannesburg bourse has gained 5.8 per cent. Lagos has been the more erratic, shedding -14.7 per cent in January alone on the negative macro headwinds yet gaining 20.0 per cent between 20 March and 13 April on an election- driven surge.
The NSEASI has since been in broad retreat on a combination of poor company results and a sense of drift since the handover to the new administration on 29 May.” The experts at FBN Capital noted that the APC assumed power at the end of the transition with a good deal of goodwill with the population and investors.
They however, noted: “The market is waiting impatiently for new appointments and policies. We have often said that its largest challenge is not fiscal but institutional (the willingness of the legislature and the executive, both APC dominated, to work together). It gives us no pleasure to point out that our call has been vindicated. “We have seen alarmist stories that core ministerial appointments may not be made until the assembly returns from its summer recess in September and hope that they represent indirect pressure on the legislature to deliver.”
The cabinet delay won’t please investors, said Alan Cameron, an economist at Exotix Partners LLP. “They’re expecting tighter fiscal policy, a currency devaluation and a greater focus on tax collection after the drop in oil prices,” he said. “There was initially some hope that Buhari would be able to tackle these changes more quickly and with more credibility, but the time line has now been pushed back,” Cameron said by phone from London. “It’s going to be a difficult pill to swallow for foreign investors.”
Due to the delay in the formation of the cabinet and lack of vital information about what the economy direction is going to look like, it is expected that investors are unlikely to make significant investment in the market unless there is a clearer picture of the policy direction of government.

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