Shareholders of MTN Nigeria, one of the major telecommunications companies quoted on the premium board of the nation’s stock market recorded a loss of about N609 billion in the month of July following sustained sell pressure witnessed on the stock during the month.
Checks by Nairametrics showed that the telecom stock dropped by 13% to N200.10 per share from N230 which was the opening figure for the trading month.
The market sentiment for the telecom firm has remained very low amidst buy-interests and sell-offs as bears dominated proceedings during the period under review.
Checks by Nirametrics revealed that MTN Nigeria closed its last trading day (Friday, July 29 2022) at N200.10 per share and N4.072 trillion in market capitalisation on the Nigerian Stock Exchange (NGX) as against N230 per share and N4.681 trillion in market capitalisation at the beginning of trading on July 1 2022, hence has earned a loss of N285 billion or 13% month to date.
MTN began the year with a share price of 197.00 NGN and has since gained 1.57% on that price valuation, ranking it 52nd on the NGX in terms of year-to-date performance.
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Analysts believed investors should, however, take caution of MTNN’s recent poor performance, having lost 13% of its value in the past four weeks.
The sell pressure is coming at a period MTN Nigeria is expected to release its second-quarter financial report.
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This is despite the fact that telecom companies are currently taking advantage of remote working which most companies have adopted following the COVID-19 pandemic to rake in gains from data subscriptions and voice calls.
Many workers are leveraging the Internet for online education, teleworking, gaming and entertainment and there has been a rise in Internet traffic recorded by the Internet exchange point.
Internet traffic had increased as many companies introduced work-from-home policies a week before the government-imposed lockdown.
Professor of Capital Market at the Nasarawa State University Keffi, Uche Uwaleke has said that the impact of electioneering on equity and fixed income markets is mostly felt in the second half (H2) of a penultimate election year and such pre-election years in Nigeria are characterized by tension and uncertainties ahead of the general elections with adverse consequences for the economy and the equities market in particular.
What Uwaleke is saying
The next six months according to the financial economist, would be characterized by a rising inflation rate as the impact of the Central Bank of Nigeria’s (CBN’s) tight monetary policy will be insignificant in taming inflationary pressure.
- He said: “Domestic Investors’ sentiment is usually weak as they seek to reduce their market exposure when elections draw closer. The intensity of the impact is usually a function of the degree of political tension and uncertainty generated by political activities
- “While the ASI depreciated in September for all penultimate election years, it appreciated in January for all election years except 2015. The outlier, January 2015, was the election year that ushered in the present administration characterized by high tension and uncertainty, compounded by the fall in international crude oil price and the rumoured break-up prediction of Nigeria in 2015 by the United States National Intelligence Council.”
- According to him, the bearish run experienced in the stock market in H2 of 2014 (largely on account of the tension) lingered into January 2015.
- “To identify mis-priced stocks, the application of ‘Tobin-Q’ or ‘Kaldor’s V’ and Price/Earnings ratios is advised. Ultimately, the best strategy to shield the headwinds is to stay with securities that have solid fundamentals as well as ensure a well-diversified portfolio of investments particularly during electioneering periods,” he advised.