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Nigeria: All-Share Index Falls 1.7% As Demutualisation Fails to Lift Market

The stock market recorded its sixth consecutive decline last week with the Nigerian Stock Exchange (NSE) All-Share Index (ASI) declining by 1.74 per cent to close at 38,648.48, while market capitalisation shed N357.4 billion to be at N20.221 trillion. Investors continued to take profit from high valued stocks in spite impressive performance from earnings releases.

Also, the news of the completion of the NSE’s demutualisation that hit the market on Wednesday failed to sway investors’ sentiment to positive territory as they await further clarification on how the market would benefit from this development.

According to a stockbroker and Chief Executive Officer of CEO, Sofunix Investment and Communications, Mr. Sola Oni, “some investors may adopt wait and see attitude due to lack of understanding of the benefits while nervous ones will not hesitate to sell off their stocks.”

He said the NSE would need to do a lot more on public enlightenment on the benefits of the demutualization for them to understand better.

Speaking on the corporate earnings, Oni said while some have announced outstanding performance with strong dividend payout, others have posted unimpressive earnings with a deep reduction in dividend.

“For instance, dividend policy of one of the major banks is currently a subject of controversy among shareholders and other stakeholders. Increased yields on fixed income securities has also dampened investor confidence in equities as astute investors will compare dividend yield with returns from other asset classes. This becomes important in this regime of double digit inflation and negative returns,” he said.

He explained that the Central Bank of Nigeria is deploying different strategies to address the issue of forex scarcity but forex scarcity remains a major concern for foreign portfolio investment who trade large volumes.

“There is so much uncertainties in the economy. At the weekend, pump price of petrol has ushered in another level of fears. However, smart investors always take advantage of bearish trend to invest more in blue chip companies whose shares are trading below intrinsic values. The good thing is that market fundamentals remain strong,” he said.

Meanwhile, investors traded 1.675 billion shares worth N23.541 billion in 21,732 deals last week compared with 2.092 billion shares valued at N29.744 billion that exchanged hands in 24,238 deals the previous week.

The Financial Services Industry led the activity chart with 1.200 billion shares valued at N10.272 billion traded in 12,518 deals; thus contributing 71.64 per cent and 43.64 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 110.564 million shares worth N3.577 billion in 3,234 deals, while the third place was occupied by the Industrial Goods Industry, with a turnover of 99.761 million shares worth N5.322 billion in 1,309 deals.

The price movement chart showed that 35 equities appreciated in price during the week, higher than 14 equities in the previous week, while 38 equities depreciated in price, lower than 71 equities in the previous week.

Champion Breweries Plc led the price gainers with 45.2 per cent trailed by Regency Assurance Plc with 22.2 per cent. Smart Products Nigeria Plc chalked up 20 per cent.

Conversely, Eterna Plc led the price losers with 18/9 per cent, followed by Meyer Plc with 18 per cent, just as African Alliance Insurance Plc shed 16.6 per cent.