Stock market sheds N1.14trn loss in 2 months

External reserves decline by $1.3bn in one month
Trading activities on the floor of the Nigerian Stock Exchange (NSE) finished the last two months (July and August) on the negative rout with a record of N1.144 trillion losses to close at N12.722 trillion in market capitalization as sell offs continue to rule the market.The growing insecurity and apprehension over political crisis ahead of 2019 general elections have continued to take tolls in the market. Market analysts linked the sell pressure to increased political uncertainty and the unrestrained utterances of politicians in the country.

They believe that these factors will further constrict the performance of the stock market for the rest of the year.Available statistics to New Telegraph showed that activities on the Nigerian Stock Exchange (NSE), which opened the trading month at N13.866 trillion in market capitalisation and 38.278.55 in index points at the beginning of trading on July 2, 2018, closed on August 31 at N12.722 trillion and 34.848.45 index points, hence has earned a loss of about N1.144 trillion or -8.96 per cent. Further analysis on monthly basis showed that due to profit takings, the stock market closed the month of July with a loss of N457 billion from N13.866 trillion to N13.409 in market capitalization, accounting for a drop of 3.29 per cent. Also, the stock market sustained loss position in August, despite good results being released by some quoted companies. The month saw a drop of N687 billion or -5.8 per cent from N13,409 trillion recorded in July to N12.722 trillion on August.

The activities in August accounted for the highest loss recorded during the period under review. Further checks also revealed that the banking stocks quoted on both the main board and the premium board led the losers accounting for about 37 per cent of the overall drop with a loss of N416 billion from N3.389 trillion to close at N2.973 trillion during the period under review.

Jaiz Bank led the losers with a drop of N5.894 billion or 28.56 per cent to close at N14.732 billion from N20.624 billion posted at the beginning of July. Fidelity Bank followed with a loss of N18.834 billion or 28.28 per cent to close at N47.808 billion from N66.642 billion. Skye Bank was down by 26.09 per cent from N9.577 billion to close at N7.078 billion in August. UBA Plc. declined by 23.8 per cent or N85.498 billion to close at N273.595 billion from N359.093 billion while Unity Bank finished with 23.70 per cent decline from N11.338 billion to N8.650 billion. According to analysts at Cordros Capital, sentiments turned negative in the equities market, as the ASI dropped 1.63 per cent to 34,848.45 points. “This led to increases in the Month-to-Date and Yearto- Date losses, to 5.86 per cent and 8.88 per cent respectively. Four of the five trading sessions closed in the red, as sell pressure ensued in value stocks. While noting that the lower-than-expected GDP growth figure sent negative signals to the market, news of the apex bank’s fine on Stanbic IBTC and Diamond Bank for illegally repatriating funds on behalf of telecommunications company, MTN Nigeria, also contributed to the market’s negative sentiments. “We guide investors to trade cautiously in the short-to-medium term, as the absence of a positive one-off catalyst and brewing political concerns, continue to cast a shadow on our outlook for risky assets. However, the likelihood of recovery in the long term remains supported by stable macroeconomic fundamentals,” they said.

The Association of Stockbroking Houses of Nigeria (ASHON) had observed that the unguarded activities and unrestrained utterances of politicians are heating up the polity with dire consequences on the economy as a whole and the capital market in particular. ASHON, in a statement made available to New Telegraph, said: “For the umpteenth time, we strongly appeal to the political class that rather than indulge in unwholesome activities, actions, attitudes and destructive utterances, they should support all efforts aimed at creating the much-needed enabling environment for accelerated economic growth and development.”

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