The Nigerian Stock Market All Share Index closed the month of March in red with a negative return of 0.91 snapping back-to-back gains recorded in January and February respectively.
This is also the 5th consecutive year of losses for the stock market in the month of March making the month one of the most bearish for stock market enthusiasts. No other month has recorded as many consecutive years of losses in the last 5 years.
The majority of Nigerian Stocks released their audited financial statements during the month and followed with dividend announcements and other forms of corporate actions. However, this was not enough to stop stocks from losing ground in March.
During the months there were a total of 23 gains and 79 losses. Nairametrics tracks 158 actively traded stocks categorized under Main Board, Premium Board, REITs, Closed Funds, and Exchange Traded Funds.
Economic Impact
Nigerian stocks hardly react to economic indicators such as inflation and GD Growth rate however, it is largely correlated with the price of oil and a stable exchange rate.
- However, despite oil prices hitting 8-year highs, stocks failed to gain traction as investors failed to see any positive impact of the gains on the fortunes of stocks.
- Rather Nigerians faced an energy crisis with fuel and diesel scarcity negatively impacting businesses. Diesel prices for example hit an all-time high of N650/liter during the month.
- Nigeria’s exchange rate crisis, however, remains, affecting the influx of forex foreign portfolio investors who typically drive demand upwards.
- The central bank also kept its benchmark interest rates low and maintained the same monetary policy as it has in recent years.
- The CBN in its monetary policy communique for March attributed the gains in February and March to “gradually improving macroeconomic fundamentals which support improved outcomes and returns on
investments from companies quoted on the Nigerian Exchange Limited” even as economic indicators worsened during the month.
Why the loss
Nairametrics research indicates a major reason for the losses was the spate of markdowns that occurred during the month as stocks closed their registers for dividend payments.
- For example, 9 out of the 24 stocks that declared dividends closed their register during the month. They include high-volume stocks such as Zenith Bank, GT Bank, UBA, Nigeria Breweries.
- Another reason that is attributed to the losses could also be the high price to earnings multiple of some of the most valued stocks. For example, the SWOOTs, MTN, Dangote Cement, Airtel all hit year highs during the month before rescinding.
- Agro stocks like Okomu OIl, Presco have also hit all-time highs.
- Investors appear to have hit overbought territory with most stocks out of reach in terms of valuations.
Gainers and Losers
- Wema Bank topped the gainer’s chart with a 184% pop taking its total gains this year to 279%
- PZ and Presco follow in second and third gaining 51% and 28% respectively for the month
- Nigeria Insurance and RT Briscoe led the losers with 33% and 31% losses respectively. RT Briscoe is still up 195% this year.
- Apart from NPF Microfinance Bank +19% and Fidelity Bank +7% all the listed banks ended the month with losses.
- For the SWOOTs, only MTN +6%, while BUA Foods and Nestle lost 3% respectively. Airtel, BUA Cement, and Dangote Cement closed flat.
