COVID-19 Impact: Amid Global Losses, Nigerian Equities’ Turnover Drops by 44%

Abuja – Due to the emerging disruptions by COVID-19 pandemic and global economic challenges, Nigerian equities halted their month-long rally with a 44 per cent decline in turnover as investors appeared to take a pause on global stocks. Nigerian equities closed weekend with average decline of 0.72 per cent, equivalent to net capital depreciation of N90 billion.

Nigerian stock market performance trailed global equities indices with declines across major advanced and emerging economies. United States of America’s Dow Jones Industrial Average and S & P 500 closed weekend with average decline of 2.9 per cent and 2.6 per cent respectively.

United Kingdom’s FTSE 100 Index dropped by 2.4 per cent. The MSCI EM Index- which tracks emerging markets stocks, declined by 2.3 per cent while the MSCI FM Index- which tracks frontier markets stocks, posted average loss of 2.3 per cent.

Most analysts were less optimistic about the outlook for the stock market citing the emerging disruptions by COVID-19 pandemic and global economic challenges.

Analysts at Cordros Securities said increasing cases of COVID-19 and Nigeria’s weak economic conditions are major risks that could influence Nigerian stock market performance in the months ahead, urging investors to take cautious approach.

“Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks,” Cordros Securities stated.

Market Analyst at FXTM, Han Tan at the weekend said markets were taking stock of their exposure to risk while mulling the protracted and arduous recovery that awaits the global economy.

“The coming months remain paved with downside risks and the threat of chilling US-China relations amid this global pandemic will only further inhibit global risk appetite,” Tan stated.

The All Share Index (ASI)- the value-based common index that tracks share prices at the Nigerian Stock Exchange (NSE), closed weekend at 23,871.33 points as against its opening index of 24,045.40 points for the week.

With this, the average year-to-date return stood at -11.07 per cent. Nigerian equities had in the first week of May sustained considerable rally, which still left month-to-date return positive at 3.69 per cent at the weekend.

Aggregate market value of all quoted equities at the NSE dropped from the week’s opening value of N12.531 trillion to close at N12.441 trillion, representing a drop of N90 billion.

The negative overall market performance was driven largely by losses in the industrial goods and financial services sector.

The NSE Industrial Goods Index declined by 2.18 per cent. The NSE Insurance Index dropped by 0.56 per cent while the NSE Banking Index dipped by 0.03 per cent.

Meanwhile, the NSE Consumer Goods Index appreciated by 2.25 per cent while the NSE Oil and Gas Index posted average gain of 1.56 per cent.

The momentum of activities slowed down considerably with turnover volume, value and number of deals dropping by 44.3 per cent, 46.3 per cent and 27.4 per cent respectively.

Total turnover stood at 926.42 million shares worth N9.77 billion in 20,910 deals last week compared with a total of 1.66 billion shares valued at N18.21 billion traded in 28,791 deals two weeks ago.

The financial services sector remained atop the activity chart with a turnover of 676.072 million shares valued at N5.053 billion in 10,753 deals; contributing 72.98 per cent and 51.73 per cent to the total equity turnover volume and value respectively.

The conglomerates sector staged a distant second position with 71.117 million shares worth N399.502 million in 445 deals while consumer goods sector placed third with a turnover of 48.835 million shares worth N1.569 billion in 3,497 deals.

Banking stocks dominated activities chart with the trio of FBN Holdings Plc, Guaranty Trust Bank and Zenith Bank emerging the three most active stocks, accounting for 335.075 million shares worth N4.061 billion in 4,885 deals, representing 36.17 per cent and 41.58 per cent of the total equity turnover volume and value respectively.

Also, a total of 146,484 units of Exchange Traded Funds (ETFs) valued at N7.397 million were traded in 13 deals compared with a total of 17,476 units valued at N1.502 million traded in 10 deals penultimate week.

In the bond segment, a total of 7,878 units valued at N9.070 million were traded in 12 deals compared with a total of 2,438 units valued at N2.594 million traded in six deals two weeks ago.

There were 32 advancers against 28 decliners last week as against 39 gainers and 22 losers recorded in the previous week. NPF Microfinance Bank led the gainers, in percentage terms, with a gain of 50.85 per cent to close at N1.78 per share.

Unilever Nigeria followed with a gain of 20.95 per cent to close at N12.70. May & Baker Nigeria rose by 20.93 per cent to close at N3.12. McNichols appreciated by 19.05 per cent to close at 50 kobo. Eterna rose by 18.52 per cent to close at N2.56. Fidson Healthcare rallied by 14.92 per cent to close at N2.85 while GlaxoSmithKline Consumer Nigeria rose by 13.39 per cent to close at N6.35 per share.

On the downside, UACN Property Development Company led the decliners with a drop of 13.04 per cent to close at 80 kobo. CAP followed with a loss of 9.83 per cent to close at N20.65. Arbico dropped by 9.73 per cent to close at N2.32.

Custodian Investment dipped by 9.52 per cent to close at N5.70. Afromedia lost 8.82 per cent to close at 31 kobo while Union Bank of Nigeria declined by 8.57 per cent to close at N6.40 per share.

At the NASD OTC Securities Exchange- the over-the-counter market for trading in shares of unlisted public limited liability companies, transactions also were generally negative with the NASD Security Index (NSI) dropping by 0.92 per cent to close weekend at 693.94 points as against 700.39 points recorded as opening index for the week. With this, the NSI year-to-date return dropped by 0.52 per cent.

Investors at the NASD lost N4.71 billion as NASD OTC market capitalisation dropped to N509.75 billion at the weekend as against N514.46 billion recorded as opening value for the week.

However, there was a 82.5 per cent increase in the total value traded during the week with a total of N9.671 million recorded last week compared with N5.289 million recorded in the previous week. Total trade activity so far this year stood at N7.43 billion.

Turnover volume meanwhile dropped by 67.7 per cent to 73,715 shares last week compared with 226,825 shares recorded in the previous week. This brought total volume traded so far this year to 7.62 billion shares.

Reviewing the global outlook for equities, Tan at the weekend stated that the global economy is on a long road to “new normal”, a reference to adjustments in the post-COVID-19 period.

According to Tan, the data from United States and China should quell any notion of a V-shaped recovery for the rest of the world, much to the chagrin of stock market bulls. (The Nation).

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