Investors in equities market lost N283bn in January

Following the persisted macro economy challenges, investors in the equities market of The Nigerian Stock Exchange (NSE) lost N283 billion to underlined serious profit-taking in January.

According to records from NSE, market capitalisation of all listed equities on the bourse depreciated by 3.06 per cent from N9.256 trillion it opened the year 2017 to close at N8.973 trillion on Tuesday, January 31, 2017.

Consequently, the NSE All-Share Index which is the barometer of the market movement dropped by 838.38 basis points to close first trading month at 26,036.24 basis points from 26,874.62 basis points it opened for trading in 2017.

Analysts attributed the capital market performance to macro economy challenges and investors’ sentiment trading amid hike in inflation, illiquidity in foreign exchange and government indecisive fiscal policies.

The National Bureau of Statistics (NBS) reported 18.55 per cent inflation rate in December 2016 from, 0.07 per cent higher than 18.48 per cent recorded in prior month.

The International Monetary Fund (IMF) had blamed the doubled digit inflation rate on the challenges around foreign exchange, adding that efforts of the Central Bank of Nigeria (CBN) to defend the naira by foreign exchange rationing crumbled.

Analysts believed the equities market decline in January was a reflection of the nation’s economy as the economy is still in recession as expected. Investors’ confidence is still low considering poor corporate earnings by listed companies.

It was however believed that the capital market might appreciate in February once listed companies announced impressive earnings.

“It is only impressive results by listed companies that can propel the capital market in weeks ahead,” an analyst at Highcap Securities Limited said.

With a loss of N4.7 billion, investors in Guinness Nigeria Plc recorded the highest lost in first trading month of 2017. The company’s share price plummeted by 22.8 per cent or N18.90, from N83.05 it opened to close at N64.15.

While speaking on half year ended December 31, 2016 accounts, Managing Director/CEO, Guinness Nigeria Plc, Mr Peter Ndegwa, said, “The unrealised foreign exchange losses during the half year meant that our net finance cost grew by 166 per cent.

“As a result of the high input costs (in part driven by foreign exchange) and the foreign exchange impact on financing costs, we recorded a Loss Before Tax of N4.6 billion.”

Forte Oil Plc that announced 50 per cent decline in profit for the financial year ended December 31, 2016 recorded the second highest price losers.

The share price of Forte Oil dropped by 15.6 per cent or N13.21 to N71.22 from N84.43 per share it opened for trading this year.

Furthermore, investors in 7-UP Bottling Company Plc lost 13.1 per cent or N16.90 to N112.10 from N129.00, to lead top three losers in January.

The Exchange said the oil price shocks and associated prolonged foreign exchange dilemma, coupled with challenges to policy implementation, drove the nation’s economy into its first recession in over 20 years.