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Equities value dips by N209bn on election delay

By on February 11, 2015

Investors on Monday reacted negatively to the postponement of the general elections by the Independent National Electoral Commission, causing the major market indicators to record their biggest drop in more than one week.

At the close of trading, the Nigerian Stock Exchange All-Share Index and the market capitalisation of the listed equities dipped by 2.08 per cent each.

While the ASI lost 624.53 basis points to close at 29,360.55 basis points, the market capitalisation shed N209bn to close at N9.796tn.

Experts, who spoke with our correspondent, attributed the development to INEC’s decision on Saturday to shift the elections, which were initially scheduled for February 14 and 28, 2015, to March 28 and April 11.

On Sunday, both the United States and the United Kingdom condemned the postponement of the elections, with the presidential candidate of the All Progressives Congress, Maj. Gen. Muhammadu Buhari (retd), the Arewa Consultative Forum, Academic Staff Union of Universities and others also criticising the move.

According to the Chief Executive Officer, Enterprise Stockbrokers, Mr. RotimiFakayejo, apart from the uncertainty caused by the postponement in itself, the disappointment expressed by the US, UK and others sent a negative signal to investors in the capital market.

Asked if the postponement impacted the market, he said, “I think it is more like it because the extent to which we saw the market dip today (Monday) was quite alarming; we were expecting a drop below one per cent. However, we saw even the major stocks losing steam; those in the consumer goods sector like Nestle and Nigerian Breweries.

“We saw that extending to Dangote Cement and the banking sector. So, it was really alarming.”

A review of the performance of the stocks showed that the Banking Index was the worst hit, shedding 5.06 per cent. It was followed by the NSE Consumer Goods Index and the NSE 30 Index, which were down by 3.85 per cent and 2.38 per cent, respectively.

The Industrial Index also declined significantly, losing 2.36 per cent. In fact, only the NSE Oil and Gas Index appreciated on Monday.

Considering that the top stocks were affected the most, with only eight stocks appreciating on Monday compared to 36 losers, Fakayejo said it was possible that more foreign investors had exited the market.

“If that is anything to go by, then we are going to see more of the effect tomorrow. If those countries have condemned the postponement – I even read that Canada too has condemned the postponement – some of their citizens who have investments in the country may exit,” he added.

Fakayejo, however, expressed optimism that the reaction would subside before the end of the week “and we will begin to see better transactions in the market.”

The Chief Executive Officer, Highcap Securities Limited, Mr. David Adonri, also attributed the performance of the stock market on Monday to the postponement of the elections.

 

[ThisDay]