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Glut of shares in the market •As investors lose N17bn to NSE crisis
THE return of illiquidity in the stock market and the apathy towards purchase of stocks as a result of recent changes in the management of the Nigerian Stock Exchange (NSE) worsened the performance of securities market last week.
The grip of the bears likened to the bulls in the China shop affected the value of investment negatively.
During the five trading days of the week, investors’ wealth again fell by N179 billion in reaction to the removal of the former Director General of the NSE, Professor Ndi Okereke-Onyuike and the suspension of the President, Alhaji Aliko Dangote.
However, experts warned that the rage of the bears is expected not to stay for long before the market would start to appreciate in value, but not until the end of current crisis in the market. They noted that confidence of investors would continue to remain at the lowest ebb as a result of the litigation by Prof Okereke-Onyiuke over her removal and alleged misappropriation of N11 billion by the management of the NSE.
Liquidity squeeze in the market before now had been a major headache for both operators and regulators who felt they had done all that was needed to bring back funds into the market but the reverse has been the case. The resultant effect is the glut of shares in the market without buyers.
It was a week of sellers’ market, where investors continued to take profit for both personal purchases and other obligations in need of fund.
Most institutional investors from outside Nigeria that helped the market to appreciate in value during the first quarter of the year pulled out their funds to other areas, with a slight appreciation in prices of stocks.
Market observers believed that litigation over Dangote’s presidency of the equities market would continue to bring disrepute to the market expected to be driven by sound corporate governance and respect for rules of law.
It would also be recalled that, Alhaji Aliko Dangote had accused the management of the NSE, led by the former director-general, Ndi Okereke-Onyiuke, of misappropriating a total of N11 billion in 2007 and 2008.
Dangote’s petition, sent to the Securities and Exchange Commission (SEC), alleged that Okereke-Onyiuke spent only N4.2 billion to develop the market.
A review of trading activities on Monday ended in the red as both the market performance indices, market capitalisation and All-Share index recorded losses despite optimism expressed by the leadership of SEC that intervention in the market would result in a bullish run.
The market capitalisation of equities dropped by N32 billion or 0.50 per cent to close at N6.2 trillion, while All-share index shed 132.7 points or 0.50 to close at 25,606.09 index points.
At the end of trading on Monday, about 30 stocks appreciated in value with Northern Nigerian Flour Mills leading on the gainers’ table with N1.67 to close at N35.25. This was followed by Guinness Nigeria Plc with a gain of N1.56 to close at N166.50, while UACN added N1.40 to close at N43.40.
Other gainers on Monday include: UACN with a gain of N1.40, PZ Cussons N1.09 and Oando Plc N0.57.
On the downward side, about 37 stocks depreciated in value, with Julius Berger leading the pack of losers’ with a loss of N2.73 to close at N52.28. Nigerian Breweries followed with a loss of N1.05 to close at N74.00, while WAPCO lost 64 kobo to close at N38.42.
Other losers on that day included, United Bank for Africa, with value depreciation of N0.51, while Cadbury fell by N0.50.
Transaction on Tuesday continued on the laggard as equities on the NSE suffered another value decline, resulting in the depreciation of investors’ wealth by N53 billion.
Turnover of shares also recorded a decline, as 220 million shares worth N2billion changed hands in 6,312 deals, as against 259 million units valued at N2.67 billion exchanged in 8,895 deals on Monday.
Specifically, market capitalisation of the Exchange dropped by N53billion or 1.0 per cent from N6.262 trillion recorded on Monday to N6.199 trillion on Tuesday, while the All-share index dipped by 253.5 points or 0.995percent from 25,606.09 to 25,350.98.
Specifically, market analysts who spoke to Nigerian Tribune attributed the drop in indices to the recent development in the stock market that led to the appointment of new management and the commencement of festive period (Ramadan) season by some investors.
They also blamed the poor performance of the market on the sales of treasury bills by the Central Bank of Nigeria (CBN) and the sales of bonds by the Debt Management Office (DMO). Precisely, 48 stocks recorded price depreciation on Tuesday, compared to 22 that constituted the gainers’ chart.
Nigerian Breweries emerged the day's highest price loser with 150kobo to close at N72.50 per share, and the gainers’ chart was led by Julius Berger Nigeria Plc with 261kobo to close at N54.89 per share.
On Wednesday, the market capitalisation and All-Share index, representing total value of investment on the NSE, dropped significantly by 1.26 per cent each. For instance, the capitalisation which opened at N6.199 trillion dipped by N77.9 billion to close at N6.121 trillion, while the index shed 318.89 basis points to close at 25,032.09 points from 25,350.98 points. This was amid reports of uncertainty among staff of the NSE, going by a number of redeployment and restructuring being carried out by the newly appointed Interim Administrator, Mr. Emmanuel Ikazoboh.
A source also hinted Nigerian Tribune that the new administration in the NSE had embarked on a number of cost-cutting measures, including the review and revocation of a number of contracts outsourced.
The source noted that the cost-cutting measures were introduced without proper consultation. This, he said, had negatively affected the smooth running of the NSE, such as the delay in the release of the Daily Summary due to lack of printing papers.
Trading on the floor of the NSE on Thursday continued on the bearish run as most major blue chip companies suffered losses. A review of market indicators showed that; the All-Share Index shed 0.17 per cent or 44.06 basis points to close at 24,988.03, as against 25,032.09 as its opening index; while market capitalisation of equities further dropped by 0.16 per cent or N10 billion to close at N6.111 trillion.
Further review of transactions on Thursday revealed that 25 stocks appreciated in value, with Unilever that led the pack of gainers’ with N1.17 to close at N24.67. Okomu Oil followed with a gain of 61 kobo to close at N12.81. Cadbury Nigeria added 50 kobo to close at N29. Ecobank Transnational Incorporated increased by 46 kobo to close at N16.60, while Presco added 30 kobo to close at N6.30.
Conversely, 29 stocks depreciated with Nigerian Brew-eries leading on the laggard with a loss of N1.55 to close at N69.10. Access Bank Plc shed 25 kobo to close at N8.20. RT Briscoe dropped by 19 kobo to close at N3.65. Nigerian Bags decreased by 11 kobo to close at N2.65 kobo.
Diamond Bank equally depreciated by 11 kobo to close at N7.20 among other losers.
In all, investors staked a total of 145.2 million shares worth N1.4 billion in 5,208 deals.
Analysis of transactions on the sub-territorial level showed the banking sub-sector as the most active with a turnover of 79.4 million shares valued at N520.7 million in 2,838 deals.
The mortgage sub-sector followed with a turnover of 13 million shares worth N12.7 million in 108 deals. Automobile sub-sector recorded a turnover of 10.7 million valued at N39.2 million in 21 deals while insurance sub-sector recorded a turnover of 7 million shares valued N8.2 million in 217 deals.
The market closed on Friday on a bad note, as the market capitalisation dipped by N1 billion, while the index fell 3.23 points to close the week at low of N6.110 trillion and 24,984.80 points respectively.
The total loss in the market in percentage terms stood at 2.93 per cent.
The All-Share index, another index for measuring performance of listed equities, shed 753.99 basis points to close the week at 24,984.80 points from 25,738.79.
A review of the cumulative transactions for the week showed that Northern Nigerian Flourmills Plc appreciated the most; the stocks of the company rose by N3.43. Nestle Nigeria Plc followed closely with N2.00 per share, while the Okomu Oil Palm, PZ Cussons and Ashaka cement ended the week among the five top gainers with N1.90, N1.09 and N0.98 per share.
On the other side of the table, the shares of Nigerian Breweries, Flourmills of Nigeria Plc, UAC of Nigeria Plc, Dangote Sugar Refinery Plc and UACN Properties Development Plc slid in value by N7.04, N1.99, N1.90, N1.70 and N1.44 per share, respectively.Share