Investors lose N227.9bn on stock market in three days

LAGOS — The fortunes of investors on the Nigeria Stock Exchange (NSE), yesterday, declined for the third consecutive day, resulting to N227.9 billion loss in the first three trading days of the year.

Meanwhile, the Central Bank of Nigeria (CBN), yesterday, mopped up N172.8 billion excess cash from the banking system through the sale of treasury bills, prompting cost of funds to rise moderately.

Analysis of trading on the NSE for the first three days showed that market capitalization, which represents total value of listed shares, dropped steadily from N9.25 trillion at the end of 2016 to N9.02  trillion yesterday. The market capitalization dropped by N88.7 billion on Tuesday, N41.9 billion on Wednesday and by N97.4billion, yesterday. The All share Index (ASI) also dropped steadily to 26, 212.09 points, yesterday, from 26,874.62 at the end of 2016.

Last year, investors lost N603.7 billion on the NSE as the market capitalisation fell from N9.850 trillion on December 31, 2015 to N9.246 trillion at the close of trading on December 30, 2016, representing 6.13 per cent Year to Date loss. Capital market operators attributed the loss to the impact of the economic recession on the stock market.

Yesterday’s decline in market capitalisation was majorly driven by sell sentiment in highly capitalised stocks. Dangote Cement Plc dropped by 4.0 per cent. However, market activity improved as volume and value traded rose by 121.8 per cent and 14.4 per cent to close at 137.7m units and N898.7million respectively.

Mixed Sector Performance

Sector performance was mixed as three indices gained while two declined. The Industrial Goods index led the losers’ chart with a loss of 1.8 per cent dragged by Dangote Cement four per cent loss.

The Consumer Goods index followed, closing 29 bases points, bps, lower on account of price depreciation in Guinness Nigeria Plc, which dropped by 5.0 per cent and Dangote Flour Plc that declined by 4.9 per cent, while the Oil & Gas index slid 14 bps due to a price decline in Forte Oil,  which dropped by 3.4 per cent.

On the contrary, the Banking index gained 1.7 per cent as investors took position in Guaranty Trust Bank, which gained 2.5 per cent and Access Bank with 4.9 per cent,  while the Insurance index gained 0.7 per cent trailed on the back of gains in Continental Insurance, which garnered 4.2 per cent and WAPIC  Insurance, 3.9 per cent.

However, despite yesterday’s negative close, investors sentiment improved as reflected in the gainers’ chart, 17  stocks gained against 16 decliners in the previous session. The best performing stocks were UAC-Property which gained 7.3 per cent,  followed by Oando  Plc  with 5.6 per cent and Access Bank 5.0 per cent, while NAHCO Plc declined by 9.5 per cent followed by Guinness which nosedived by 5.0 per cent and  Dangote Flour 4.9 per cent  recorded as the worst performers.

CBN mops up N172bn

The Central Bank of Nigeria (CBN), yesterday, mopped up N172.8 billion of excess cash in the banking system through the sale of treasury bills. The amount of treasury bills sold was, however, 50 per cent higher than what was scheduled for the week.

According to the Treasury bill issuance calendar for the first quarter, the apex bank was scheduled to N123.2 billion worth of treasury bills this week. Result of treasury bills sale, yesterday, revealed that the CBN sold N115.85 billion worth of 364 days treasury bills at interest rate of 18.68 per cent; N35 billion worth of 91 days bills at 14 per cent; and N22 billion worth of 182 days bills at 17.5 per cent.

The treasury bills sale, however, led to mild scarcity of funds in the interbank money market prompting cost of funds to rise marginally. According to the Nigerian Interbank Offered rate, interest rate for Overnight borrowing rose by 138 basis points to 9.67 percent; interest rate for three months borrowing also rose by 36 basis points to 17.88 percent while 91 days borrowing rose by 73 basis points to 22.3 percent. On the other hand, the apex bank paid for N123.2 billion for treasury bills that matured also yesterday. These comprise N28 billion worth of 91 days bills, N42 billion worth of 182 days bills and N55.9 billion worth 364 days bills.

Last week the CBN offered N70 billion worth of bills but sold N48.4 billion at average interest rate of 18.3 percent. Meanwhile the naira appreciated to N488 per dollar at the parallel market due to weak demand. The naira had closed at N490 per dollar last week. Managing Director/Chief Executive, H.J Trust BDC, Mr. Harrison Owoh said that the market is quite with little activity. He said: “Activity will pick up next week when most traders would have resumed, and people would be buying for travelling and other purposes. The CBN too will also resume sale of dollars to BDCs next week, so that is when activity will pick up.”

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