Coronavirus: Nigerian stock market hits 7 months low

BARELY 24 hours after the news of the first coronavirus outbreak in the country, the Nigerian stocks hit its lowest level in the year, recording only two gainers against 41 losers by the end of trading activities at the Nigerian Stock Exchange (NSE) on Friday.

Consequently, the Year-to-Date (YtD) gain of the local bourse closed on a negative note by 2.331 per cent, as the market capitalisation lost N308 billion, representing a loss of 2.21 per cent to close at N13.657 trillion as against N13.965 trillion recorded on Thursday, while the All-Share Index, which opened at 26,808.24, shed 591.78 points or 2.21 per cent to close at 26,216.46.

Flour Mills and Vitafoam stocks remain perturbed by the news of the coronavirus in Nigeria as they gain 4.76 per cent and 5.88 per cent to close at N22 and 24 kobo per share respectively.

Conversely, Presco recorded the highest loss to lead the losers’ table, dropping by N4.95 to close at N44.90 per share. Nigerian Breweries trailed with N4.50 to close at N40.50, while Stanbic IBTC dipped N3.60 to close at N32.50 per share. Guarantee Trust Bank declined by N2.60 to close at N23.80, while MTN Nigeria was down by N2.10 to close at N110 per share.

Meanwhile, market activity was upbeat as total volume and value of stocks traded rose by 79.81 per cent and 38.18 per cent to 0.41 billion units and N6.19 billion respectively.

Senior Research Analyst at FXTM, Lukman Otunuga, noted that the country would be affected by the outbreak, as China is one of Nigeria’s biggest trading partners with total trade flows in Q3 2019 worth over $3.2 billion.

“It is important for the economy that the virus outbreak is brought under control, because if trade flows decline on the back of slowing growth in China, the impacts are likely to be felt in Nigeria,” he advised.

He added that the dramatic and fast-moving consequences of the coronavirus (COVID-19) outbreak threaten an otherwise resilient outlook for Nigeria’s economy, following GDP results for Q4 showing an expansion of 2.55 per cent. The growth was the highest seen since 2015 and above the International Monetary Fund (IMF)’s 2.1 per cent forecast.

On the global scene, equities lost a tenth of their value this week as investors piled into havens on growing concerns that the coronavirus outbreak will hit the world economy and impact corporate profits, thus, analysts foresee the worst global market sell-off since the 2008 crash.

CEO and founder of deVere Group, Nigel Green, noted that until this week, the markets had largely shrugged off the impact of the outbreak of coronavirus.

He, however, advised that “the worst global market sell-off since the 2008 crash will almost certainly become an important buying-opportunity for many investors.

“With markets on the brink of correction territory, panic-selling, mis-pricing of high quality equities, and lower entry points, this could turn out to be one of the key buying opportunities in the last 10 years.

“Some of the most successful investors will embrace volatility to create, maximise and protect their wealth. As ever in times of increased turbulence, there will be winners and losers. A professional fund manager will help investors take advantage of the opportunities that volatility presents and mitigate potential risks.”

Looking into some global bourse, Reuters calculated that global investors have lost $5 trillion since Monday, as markets priced in the threat of a global recession.

The Johannesburg Stock Exchange (JSE), by the end of the week, lost almost five per cent to coronavirus panic.

Specifically, this is also what drove the JSE’s Top-40 Index (JTOPI) down 4.5 per cent (45,852 points) – its lowest level since January last year – and the broader all-share JALSH index down the same amount to 51,038 points.

Wall Street and London markets have both suffered their worst week since 2008. The FTSE 100 in London shed more than three per cent, recording more than £200 billion of losses in a week that proved to be the most brutal for investors since the depths of the financial crisis in 2008, according to The Guardian.

Germany’s DAX has now lost more than 12 per cent in one week alone, the sharpest decline since the start of the Greek debt crisis in the summer of 2011. Japan’s benchmark Nikkei 225 Stock Average briefly lost 1,000 points as the yen’s sharp rise against major currencies also hurt export-linked shares. The Nikkei lost 805.27 points or 3.67 per cent to close at 21,142.96 for the fifth trading day of decline.

Other Asian stocks also ended sharply lower. China’s Shanghai Composite index plummeted 3.71 per cent and the Hang Seng Index shed 2.42 per cent, while South Korea’s Kospi Index lost 3.3 per cent.

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