Three in every four price changes in the stock market closed weekend negative as concerns mounted over possible pullback in share prices.
The tenuous macroeconomic outlook was compounded by global anxieties over negative effect of a seeming coordinated interest rate hikes on future costs and corporate performance.
The benchmark index for the Nigerian equities market indicated average decline of 0.44 per cent last week, equivalent to net capital loss of N119 billion within the five-day trading week.
The All Share Index (ASI), the value-based index that tracks all share prices at the Nigerian Exchange (NGX), closed weekend at 49,475.42 points as against its week’s opening index of 49,695.12 points. Aggregate market value of all quoted equities at the NGX also dropped from the week’s opening value of N26.805 trillion to close at N26.686 trillion.
The decline moderate the average year-to-date return for Nigerian equities to 15.82 per cent, driven largely by substantial gain in the oil and gas sector, which posted average year-to-date return of 54.24 per cent.
The slowdown at the market mirrored the global stock markets as investors opened up sell orders over concerns that seemingly coordinated rate hikes by central banks and continuing tensions over the Russia-Ukraine crisis could hurt corporate earnings.
From America to United Kingdom, Europe, Asia and Middle East; advanced and emerging markets of reference traded mostly negative. In United States, the Down Jones Industrial Average (DJIA) dropped by 37 per cent while the S & P 500 Index declined by 4.1 per cent. United Kingdom’s FTSE 100 Index dipped by 09 per cent. The STOXX 600 Index, which tracks the broad European market, dropped by 1.3 per cent.
Japan’s Nikkei 225 Index depreciated by 2.3 per cent. China’s Shanghai Composite Index indicated average decline of 3.5 per cent. South Africa’s FTSE/JSE All Share Index dropped by 3.30 per cent. India’s Bombay Stock Exchange Sens Index dipped by 2.2 per cent. The MSCI EM Index, which tracks emerging markets and its twin index, the MSCI FM Index, which tracks frontier markets, dropped by 1.2 per cent each.
The pricing trend at the market left nearly no safe haven for investors with above-average decline across several sectors.
All sectoral indices closed in the red; underlining the negative market-wide sentiment. The NGX 30 Index, which tracks the 30 largest stocks, lost 0.50 per cent. The NGX Banking Index declined by 3.31 per cent.
The NGX Insurance Index declined by 2.58 per cent. The NGX Consumer Goods Index dropped by 0.27 per cent. The NGX Oil and Gas Index and NGX Industrial Goods Index dipped by 0.16 per cent each. The NGX Pension Index, which tracks stocks specially screened for pension funds investments, declined by 1.74 per cent while the NGX Lotus Islamic Index, which tracks stocks that comply with Islamic rules, slipped by 0.03 per cent.
There were three losers for every gainer at the NGX during the week with 13 gainers against 39 losers last week compared with 22 gainers and 36 losers recorded in the previous week. Red Star Express led the losers with a loss of 12.59 per cent to close at N2.36. Beta Glass declined by 9.96 per cent. Consolidated Hallmark Insurance dropped by 9.52 per cent dropped by 6.0 kobo to close at 57 kobo. Learn Africa depreciated by 8.44 per cent to close at N2.06. FCMB Group dropped by 7.71 per cent to close at N3.23. Triple Gee and Company dipped by 6.90 per cent to close at 81 kobo while U A C of Nigeria dropped by 6.82 per cent to close at N10.25 per share.
On the positive side, Multiverse Mining and Exploration led the gainers with a gain of 18.64 per cent to close at N2.80 per share. Associated Bus Company rose by 7.14 per cent to close at 30 kobo. Honeywell Flour Mill gained 5.78 per cent to close at N2.38. Cadbury Nigeria rose by 5.77 per cent to close at N13.75 per share. Pharma-Deko appreciated by 5.13 per cent to close at N2.05 while Academy Press chalked up 4.76 per cent to close at N2.20 per share.
The momentum of activities slowed down considerably too. Total turnover dropped to 719.398 million shares worth N8.004 billion in 17,444 deals last week as against a total of 949.819 million shares valued at N9.329 billion traded in 18,525 deals two weeks ago.
The financial services sector led the activity chart with 411.407 million shares valued at N3.943 billion traded in 9,471 deals; thus contributing 57.19 per cent and 49.26 per cent to the total equity turnover volume and value respectively. The information and communications technology (ICT) sector occupied a distant second place with 177.815 million shares worth N955.781 million in 1,573 deals while the conglomerates sector placed third with a turnover of 36.577 million shares worth N2.332 billion in 2,425 deals.
The three most traded stocks were Courteville Business Solutions Plc, Zenith Bank Plc and Access Holdings Plc, which altogether accounted for 278.293 million shares worth N1.984 billion in 3,038 deals, contributing 38.68 per cent and 24.78 per cent to the total equity turnover volume and value respectively.
Also, a total of 2,172 units of Exchange Traded Products (ETPs) valued at N352,774 were traded in 18 deals compared with a total of 3,952 units valued at N1.692 million traded in 32 deals two weeks ago.
At the secondary debt market, a total of 15,945 bond units valued at N16.238 million were traded in 15 deals last week compared with a total of 219,620 units valued at N243.115 million traded in 30 deals two weeks ago.
Analysts at Cordros Securities said they expected return-seeking investors to rotate their portfolios towards cyclical stocks that delivered decent earnings during the second quarter earnings season. However, the increase in fixed-income return will continue to be a moderating factor.
According to analysts, the absence of a near-term catalyst will likely skew overall market sentiments to the negative side, particularly as the political space gets heated.
“Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the unimpressive macro environment remains a significant headwind for corporate earnings,” Cordros Securities stated at the weekend.
Analysts at Afrinvest Securities said the market would witness a “muted performance” in the days ahead in the absence of any major catalytic positive report.
