Don't Miss


Home   >   Nigerian Stock Exchange   >   Investors count losses as bears consolidate hold on market

Investors count losses as bears consolidate hold on market

By on January 8, 2016

Investors continue to count losses at the stock market as the bearish trend persisted for the third day running. The market had ended 2015 with a decline of 17. 3 per cent and when it was expected that the bears may have a little break, they have been consolidating their hold on the market since trading began on Monday.

While it has shed about two per cent between Monday and Tuesday, the market dipped by 3.3 per cent Wednesday.

The decline, which is the highest loss in 13 monthsdepressed the Nigerian Stock Exchange (NSE) All-Share Index to close at   27,180.76.

Similarly, the marketcapitalisation shed N316. 9 billion to close lower at N9.3 trillion.

However, the huge loss  recorded yesterday stemmed from  massive sell pressure in the shares of DangoteCement Plc and Nigerian Breweries, which are the mostcapitalised stocks on the bourse.

While Dangote Cement fell by 9.8 per cent, Nigerian Breweries Plc went down by 5.5 per cent. In all, 26 stocks lost value while 13 added value. All the sectoral indicesended negatively.

The NSE Consumer Goods Index led with a decline of 2.1 per cent majorly on the losses by Nigerian Breweries (5.5 per cent) and PZ Cussons (2.9 per cent). Following the 9.8 per cent dip by Dangote Cement, the
NSE Industrial Goods Index fell by 1.3 per cent. The NSE Banking Index went down by 0.9 per cent as a Access Bank Plc and United Bank for Africa Plc lost 2.6 per cent and 2.4 per cent respectively.

The NSE Insurance Index and NSE Oil & Gas Index closed the day lower shedding 0.3 per cent and 0.2 per cent in that order.

Commenting on the bearish trend in the market, analysts at Meristem Securities Limited said  the negative mood is mainly driven by the sustained investors’ negative  sentiments  brought from last year.

“We anticipate that the bearish market mood is mainly driven by the sustained negative sentiment on the part of investors from the prior year, given that the factors that shaped the market in the past year subsists. However, while the current market mood seems unfavorable for short-term investors, we advise investors with longer term horizon to take advantage of the relatively low pricing of some fundamentally justified stocks, in anticipation of a plausible revamp in market activities in the long term,” they said.

The analysts had cited the factors that led to the dip in 2015 to include: the decline in crude oil prices, the falling value of the naira as well as the anticipation and subsequent increase of interest rates in the United States.

They had noted that participation in the Nigerian equities market would likely to remain tempered in the short-term given the impact of foreign investors and their wariness to participate given their perception that the naira is ‘unfairly’ valued.

“This, we anticipate will cause a drag to market returns, provided that the apex authority maintains its stoic stance regarding management of the forex market,” they said.

 

[ThisDay]