Index plunges by 0.05% amid dividend declarations
. Analysts blame CBN CRR debits on banks, others
Despite the dividend declarations expected to support market uptrend, equity transactions declined for three consecutive sessions last week, causing the All-share index, and market capitalisation to fall by 0.05 per cent to close the week at 25,591.95 and N13.351 trillion, respectively.
All other indices finished lower with the exception of the Nigerian Stock Exchange (NSE) Premium, NSE Lotus II, and NSE Industrial Goods, which appreciated by 0.53 per cent, 0.14 percent, and 0.35 per cent, respectively, while NSE ASeM Index closed flat.
Analysts attributed the downturn to selloffs in the banking stocks on the news that the Central Bank of Nigeria (CBN) has debited banks that failed to meet the cash reserve ratio (CRR).
A breakdown of activities for the week showed that transactions on the NSE reopened on a downturn on Monday, following price losses suffered by most blue-chip stocks, especially Honeywell Flour Mills, and Chams, causing market capitalisation to depreciate by N12 billion.
At the close of trading Monday, the All Share Index (ASI) shed 23.41 points or 0.09 per cent to 25,582.23 points. Accordingly, investors lost N12 billion in value as market capitalisation slipped to N13.346 trillion.
The downturn was impacted by losses recorded in medium and large capital stocks, including Guaranty Trust Bank, Dangote Sugar Refinery, Red Star Express, United Bank for Africa (UBA), and Zenith Bank.
Following sell pressure in most blue-chip stocks, transactions on the NSE continued on a downturn Tuesday, causing the All-Share Index (ASI) to slip further by 0.33 per cent.
The ASI decreased by 84.91 absolute points, representing a dip of 0.33 per cent to close at 25,497.32 points. Similarly, the overall market capitalisation size shed N44 billion to close at N13.302 trillion.
The downturn was impacted by losses recorded in large and medium capitalised stocks, amongst were; Guaranty Trust Bank, Guinness Nigeria, Zenith Bank, Union Bank of Nigeria, and Arbico Plc.
Capital market analysts noted that the downtrend was supported by value depreciation recorded in share prices of some tier one banks, as investors continued to book for profit given the recent increases in their share prices.
Profit-taking continued to take toll on the equities sector of the Exchange, extending the negative sentiment to three consecutive trading days, causing market capitalisation to decline further by N38 billion.
The ASI decreased by 72.41 absolute points, a 0.28 per cent fall to close at 25,424.91 points. Similarly, the overall market capitalisation shed N38 billion to close at N13.264 trillion.
The downturn was impacted by losses recorded in large and medium value stocks, including Okomu Oil, Unilever Nigeria, Zenith Bank, C&I Leasing, and UAC of Nigeria (UACN).
Analysts attributed the downturn to selloffs in the banking stocks on the news that the CBN has debited banks that failed to meet their Cash Reserve Ratios.
The Chief Operating Officer, InvestData Consulting Limited, Ambrose Omodion, attributed the downturn to selloffs in the banking stocks on account of the CRR debits by the CBN.
He urged the government to review all the current policies to roll out a workable economic recovery strategy intended to help Nigeria rebound from the prevailing crisis.
“This economic contraction should prompt the government to do the needful, and put an end to ‘business as usual’ and blame game.
“This could be done by correcting policy mismatch, lack of effective coordination among agencies, ministries, monetary and fiscal authorities, changing the implementation style of its policies and promoting transparency.”
Analysts at Afrinvest said: “In the coming week, we expect the bearish momentum to persist in the absence of any major catalyst.”Also Codros Capital said: “Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions.
“Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks.”A turnover of 1.226 billion shares worth N10.842 billion was recorded in 19,529 deals by investors on the floor of the Exchange, in contrast to 2.209 billion valued at N10.957 billion that exchanged hands in 18,013 deals during the preceding week.
The financial services industry (measured by volume) led the activity chart with 980.482 million shares worth N6.987 billion traded in 11,634 deals; thus contributing 79.99 to the total equity turnover.
The conglomerates industry followed with 59.758 million shares at N72.458 million in 550 deals. The third place was the consumer goods industry with a turnover of 58.869 million shares worth N1.349 billion in 2,862 deals.
Trading in top three equities namely Custodian Investment Plc, Zenith Bank Plc, and United Bank for Africa Plc. (measured by volume) accounted for 404.171 million shares at N3.847 billion in 3,910 deals, contributing 32.97 per cent to the total equity turnover.
A total of 54,457 ETPs units valued at N283.940 million were traded this week in 18 deals compared with 126,119 units, worth N655.919 million transacted last week in 36 deals.
A total of 7,125 units of bonds, valued at N7.762 million were traded this week in 15 deals compared with 1,016 units worth N1.099 million transacted.
Also, 23 equities appreciated in price during the week, lower than 41 in the previous week, while 38 equities depreciated, and 102 equities remained unchanged, lower than 103 equities recorded a week earlier.