Activities on the Nigerian stocks market took a negative turn in the month of July following high capitalised stocks, Lafarge Africa, PZ Cussons, and Forte Oil huge price cuts.
The month of July experienced free-fall of equity prices despite the month being the peak of the half-year earnings season. The continuous monthly decline of the stocks market was due to sustained sell-offs by foreign and some domestic investors, due to dwindling confidence in the system, as economic slowdown continue in the midst of insecurity and anxiety ahead of the 2019 general elections.
The bear dominancy during the period under review was obvious in the 22 trading sessions of the month on the Nigerian Stock Exchange (NSE), as the market was down for 13 days and up in just nine, thereby continuing the six months of decline.
Year-to-date returns on the Nigerian stocks market remain negative at 3.20 per cent, a factor that was attributed to a combination of low liquidity, capital outflows, mixed performance of listed companies and political uncertainties.
Others include the delay in passage, assent and possible implementation of the 2018 budget, as well as the declining buying pressure as revealed by volume traded for the period. The positive economic data emanating from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) before now have been ignored by smart money investors that kept selling down their positions.
Meanwhile, the All Share Index for the month lost 1,260.77 points to close at 37,017.78 after touching lows of 36,316.30 and high of 38,322.94 within the period under review from the opening figure of 38,278.55 that represented 3.29 per cent decline over the month of strong sell market position that reflected on the stock prices that are making lower low in recent days.
The market capitalisation of equities listed on the Nigerian Stock Exchange fell by N457 billion in July as bearish sentiments continued to put pressure on the bourse’s performance. Across sectors, performance was equally negative as the alternative market index, lost the most with 14.71 per cent.
Industrial Goods followed with a monthly decline of 11.36 per cent, the NSE Pension index shed 6.77 per cent, Consumer Goods down by 5.08 per cent, while Mainboard index lost by 4.51 per cent. For the month under review, the NSE30 index shed 4.25 per cent, NSE Banking lost 3.78 per cent, NSE50 depreciate by 3.70 per cent and NSE Lotus dipped by 3.34 per cent. Also, the Oil and Gas index recorded 1.90 per cent decline, just as the insurance index slipped 1.83 per cent.
A further breakdown of the month performance showed that, 17 stocks appreciated in price, while 95 stocks declined. Looking at the high capitalised stocks that decline during the month, Lafarge Africa lost 32.84 per cent, after posting a less than impressive half year result, PZ Cussons shed 27.05 per cent, Forte Oil declined by 23.74 per cent, MRS Oil lost 16.64 per cent, while International Breweries shed by 12.63 per cent.
Beta Glass lost 10.83 per cent, Flourmills Nigeria depreciated by 10.31 per cent, Nigerian Breweries shed 8.06 per cent, among others. On the gainers list, Cutix topped with 46 per cent, helped by the higher dividend payout and bonus of one-for-one share held. CCNN followed, gaining 29.17 per cent, helped by positive market sentiments and improved numbers, while C&I Leasing jumped 17.87 per cent on news of foreign company taking a stake, despite the proposed share reconstruction ahead of right issue.
Continental Reinsurance, Aiico Insurance, Vitafoam, Seplat Petroleum Development Company, Custodian investment, Law Union and Sterling Banking closed the period better at 16.55 per cent,16.29 per cent,11.11 per cent, 8.31 per cent, 6.45 per cent, 6.38 per cent and five per cent respectively.
The president, Charter Institute of Stockbrokers (CIS), Mr. Adedapo Adekoje, noted that market fundamentals remained strong, attributed the recent bearish trend to sales by foreign portfolio investors who were taking advantage of emerging higher returns on mutual funds in the United States and Europe, leading to massive sale of their shares on the Nigerian bourse.
The chairman, Association of Stockbroking Houses of Nigeria (ASHON), Chief Patrick Ezeagu, stated that nothing was wrong with the NSE in terms of governance structure, technology and compliance with the rules and regulations by stockbrokers. According to him, the quoted companies are not doing badly, given the general lull in the economy and the usual concerns about elections, which could elicit massive sale of shares, especially by foreign investors.
The chief operating officer of InvestData Consulting Limited, Mr. Ambrose Omordion said that the market and economic outlook for the months ahead remain unpredictable as the unstable global economic prospective continues to hamper investor confidence, as the lingering trade tension subsides due to new deals among countries and zones.
Speaking on factors that will boost the stocks market up, Omordion said that implementation of new pension funds new assets funding and classification. He noted investors are expected to reshuffle their portfolios and invest in equities with strong fundamentals and prospects of growing their earnings going forward, saying that a more vibrant market as a result of market players positioning for fourth quarter, even as we expect liquidity to improve more.