Investors of Airtel Africa Plc, one of the major telecommunications companies quoted on the Nigerian Exchange Group Plc (NGX) recorded a loss of about N507 billion at the end of Thursday’s trading session as the domestic bourse surrendered to selling pressure.
The market witnessed its first loss since the beginning of the New Year and ended its thirteen-day winning streak as the All-Share Index shed 1.53% to close at 50,868.52 points.
Share price performance: Checks by Nairametrics showed that the telecom stock dropped by 8.26% to close at N1,500 per share from N1,635 which was the opening figure at the beginning of day trading.
Further checksrevealed that Airtel Africa closed the trading at N5.637 trillion in market capitalization on the Nigerian Exchange (NGX) as against N6.144 trillion when the day’s trading activities began, hence has earned a loss of N507 billion or 8.26%.
Low sentiment: The decline in share prices can be attributed to investors’ low sentiment informed by the 2023 general elections approaches.
The Managing Director of Crane Securities Limited, Mr. Mike Eze in a chat with Nairmetrics said that the price adjustment mechanism that the market is currently experiencing will continue during the first quarter of 2023 and that will make the market attractive.
Politics: He noted that politics will also affect the prices of stocks as politicians and institutional investors who may be sponsors of elective positions will offload early in January in order to have cash for their campaigns.
Most astute investors are waiting for this opportunity to take a position with the hope that this category of investors will offload to finance the electioneering campaigns.
I think this will help to depress prices of shares which will lead prices to come down on the second week of January, the prices will thereafter appreciate towards the end of January,” he said.
Foreign investors: Eze noted further that panic sales on the part of the foreign investor will also be witnessed, as most foreign investors will sell and run back to their country because of election jittery.
“But if the elections are conducted on a free and fair basis, stability will return after the election and these investors will embrace the market again,” he said.
In case you missed it: a Selloff in index heavyweight, Airtel Africa which led to a drop of 8.26% was the major pullback on the overall market.
Consequently, the year-to-date (YTD) return fell to -0.75%, while market capitalization lost N429.77 billion to close at N27.71 trillion.
Further analysis of the day’s market activities showed trade turnover finished lower relative to the previous session, with the value of transactions down by 86.49%.
A total of 138.72 million shares valued at N1.83 billion were exchanged in 3,673 deals. Sterling Bank Plc which declined by -2.10% led the volume chart with 29.15 million units traded, while GTCO with the growth of +2.13% led the value chart in deals worth N477.77 million.