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Equities value drops by N41bn amid fuel crisis

By on May 26, 2015

The equities segment of the Nigerian Stock Exchange closed on a negative note on Monday with the main market indicators falling for the fifth straight trading session.

The market capitalisation of the listed equities fell by N41bn or 0.35 per cent to close at N11.603tn, while the NSE All-Share Index declined by 130.28 basis points to close at 34,151.81 basis points.

This comes amid a fuel crisis, which has grounded businesses and hurt the transport system with banks closing early and workers paying as much as double the usual fare to get to work.

Analysts believe the crisis impacted activities on the floor of the Exchange.

The Chief Executive Officers, Enterprise Stockbrokers, Mr. Rotimi Fakayejo, said investors showed less enthusiasm about equities and fewer stockbrokers made it to the Exchange on Monday.

He said, “Of course it affected the market because it reduced the number of operators to a great extent and a lot of investors were not too excited about the mood in the market and they are very cautious about their investment.

“We have seen the fuel scarcity continue to bite hard and we have seen the value traded going down very significantly. On Thursday, for instance, it was N1.35tn and on Friday, it was just barely N2bn. So, it has affected the market.”

Fakayejo, however, said with the agreement reached between the Federal Government and the fuel marketers, which would lead to a resumption in the lifting of fuel, life was expected to return to the market.

“More so for the fact that we are approaching a month end, we are likely to see things turn positive again before the end of the week,” he added.

A total of 220.475 million shares worth N2.745bn were traded in 3,612 deals on Monday with 21 stocks, led by Vono Products Plc, appreciating and 26 stocks, topped by ABC Transport Plc, declining.

Reviewing the performance of the equities market on Monday, analysts at Cordros Capital Limited said, “Growing concerns around the state of the economy continued to weigh on investor sentiment as the bench mark index dipped further by 0.35 per cent. Today’s decline extended the current bearish streak to its fifth consecutive session since May 19.”

They noted that, while the NSE Industrial Goods Index was the only index to rise – it rose by a 0.14 per cent, the NSE Banking Index topped the losers’ list with a 0.68 per cent decrease.

“We expect cautious trading to continue, as investors await clarity and stability in the economy,” they said.

Capital analysts had projected a negative start for the week, owing to the lack of positive news to boost activities.

Analysts at Vetiva Capital had said in their latest market commentary, released on Friday, that, “Given sustained pressure across large cap stocks, we expect losses to extend into the start of the coming week though we see a potential for a boost to investor sentiment in anticipation of Nigeria’s upcoming May 29 presidential inauguration.

“With the tighter system liquidity and no expected inflows in the coming week, we anticipate the market will sell off as banks raise liquidity in adjustment to the new Cash Reserve Requirement regime.”

Analysts at Meristem Securities Limited attributed the slide in the equities market to “the lack of market-driven news capable of spurring investor activities”.

“However, we remain positive in our outlook for the coming week, as the new government gears up to take office,” they said on Friday.