Local market dips by 13.49% amidst global equities slump

The Nigeria equity market last week went on decline in four of the five trading sessions amid fear of the impact of Covid-19 and oil-price slump.

The Nigerian Stock Exchange (NSE) All Share Index commenced the trading week on a negative note with a loss of 2.41 per cent. The bourse retained its stance till fourth trading session with 4.91 per cent, 3.35 per cent and 3.72 per cent respectively.

However, investors on Friday, went on bargain hunting in bellwether stocks following the CBN notice of having enough foreign exchange reserves to maintain the value of the naira.

As such, the ASI and Market Capitalisation value declined by 13.49 per cent  Week-on-Week (WoW) to close at 22,734.07 absolute points and N11.85 trillion respectively as against 26,279.61 absolute points and N13.69 trillion the previous Friday.

This in nominal term translates to a week-on-week loss of N1.85 trillion in Market Capitalisation value. Thus, leaving the Month-to-Date (MtD) and Year-to-Date losses increased to -11.9 per cent and -15.3 per cent, respectively.

All of the five major sectors contributed to the downturn of the market, led by the Banking Index with 26.15 per cent depreciation, followed by Consumer Goods with 14.79 per cent loss, Oil & Gas at -8.51 per cent decline, Insurance at -5.66 per cent and Industrial Goods at -5.41 per cent, all closed negatively.

Chi Plc emerged top gainer with 7.14 per cent for the week from the two stocks that appreciated in price this week, while Cadbury shed 38.89 per cent to emerge top loser.

There was a hike in activity level at the local bourse as a total turnover of 3.96 billion shares worth N43.70 billion in 26,054 deals were traded this week by investors on the floor of the Nigerian exchange in contrast to a total 1.81 billion shares valued at N26.01 billion that exchanged hands last week in 23,494 deals.

A total of two equities appreciated in price during the week, lower than 36 equities in the previous week. 64 equities depreciated in price, higher than 25 equities in the previous week, while 97 equities remained unchanged, lower than 102 equities recorded in the preceding week.

Analysts at GTI expect sentiment on the Nigerian equity market to remain jilted in the coming week.

“In the light of the risks posed by the ongoing “oil price” and the unpleasant impact of the COVID-19 on businesses and the global economy at large.

“However, we believe the current depressed prices of many of the fundamentally viable stocks providing incentives for a bargain hunting for investors with long term objectives to take advantage of.

Analysts at Cordros Capital however see sizeable legroom for further downslide in risk assets as investors continue to run towards safety in the face of the precipitous decline in oil price.

At APT, Analyst believed that despite the negative effect of the fear associated with the wide spread of coronavirus on the local bourse, it poses a good entry in terms of dwindled stock prices.

Beyond Nigeria, market chaos intensifies as rising panic surrounding the coronavirus pandemic pummelled equities across the globe.

Asian shares continued the global slump on Friday, plunging deeper into the abyss, while European markets posted their worst one-day drop in history yesterday. Overnight, the sell-off on Wall Street was so severe that the Dow and S&P 500 experienced their biggest one-day declines since 1987, after triggering circuit breakers for only the second time in one week, Lukman Otunuga, Senior Research Analyst at FXTM said.

“Markets are highly volatile with Trump’s travel ban on 26 European countries clearly adding more fuel to the fire, now global stocks are ablaze. It seems the ongoing uncertainty from the coronavirus outbreak is set to continue burning the outlook for the global economy.

“What is more alarming is that these gut-wrenching declines across stocks have come despite emergency action by the Federal Reserve, Bank of England and European Central Bank to rescue markets. There seems to be little faith over the effectiveness of monetary policy shielding the economy from the impact of the coronavirus, with fiscal measures seen as a better alternative in stabilising conditions.

Otunuga observed that Equities across the globe were likely to remain severely depressed amid the darkening mood, with safe-haven assets like the Dollar and Japanese Yen, the best destinations for safety.

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