Investors lost over a trillion naira in the Nigerian equities market as at 11th March 2020. The fall in Brent Crude price has shown the bloodletting that has taken place in markets for equities around the world with the Nigerian stock market losing over -12.46% year-to-date.
The performance of the stock market reflects, to some extent, the performance of the economy, particularly in a free market where there are minimal entry restrictions.
The decline in the Nigerian stock market, therefore, is an indicator of the state of the economy – an indication of loss of confidence in the underlying values of the stocks or the general performance of the firms, coupled with the geopolitical uncertainty in lieu of the Coronavirus outbreak and fear that the naira might be devalued.
Week-to-date banking stocks performance reveals that all banking stocks recorded a dip in their stock prices. The top three banking stocks with the highest dips recorded, using their week-to-date performance, include Zenith Bank, which fell from N16.95 to N12.05; Access Bank from N7.65 to N6.45, and Union Bank from N7.05 to N6.00, with percentages decline of -28.91%, -15.69% and -14.89% respectively. The stocks that recorded the lowest dip include FCMB, UBA and Unity Bank with percentages decline of -0.60%, -0.80% and -2.08% respectively.
Month-to-date oil performance reveals that 7 stocks were flat, that is, recorded no change in their share price while 3 energy stocks dipped and 2 energy stocks were bullish. The 3 energy stocks that dipped were FO, ConOil, and Oando with percentages decline of -10%, -18.89% and -22.22% respectively. The 2 stocks, which were bullish, are Eternal and Mobil with percentages increase of +1.51% and +9.98% respectively.
Peter Omoregie, CFA, Head Proprietary Trading at CardinalStone Partners Limited, explained to Nairametrics that the bearish trend around equities market, particularly oil had negatively affected Nigeria’s bourse.
He further buttressed that foreign investors had been trimming their positions, and until there were good fundamentals in the economy, he expected the trend to continue.
The fears of investors have been reflected in massive stocks sell-offs, as everybody tries pushing through the door at the same time. What looks like a stampede from the Nigerian bourse has caused a continual fall in stock prices, taking it into bearish territory.
The week-to-date performance of almost all the Nigerian Stock Exchange sector index was bearish. The Nigerian Stock Exchange banking index had a decline of -22.51% week-to-date change with the Oil and Gas sector index also recording a fall of -3.01% week-to-date change.
This was as a result of panic in the equity market due to the fall in oil-price on 9th March 2020 which was termed a ‘Bloody Monday’ (by Zenith Bank’s Founder, Mr Jim Ovia at the just-concluded Central bank growth 2.0 conference held yesterday) as result of the huge losses recorded in the equities market.
The Nigerian Stock market bearish trend is not expected to reverse soon as Saudi Arabia announced that it would make a further sale of oil to bring its total production to 12.3 million barrels per day by April 2020. This is likely to keep oil crude prices on the downward trend mid and long term