Stock market fails to rebound

The rate at which market indicators are plunging at the moment, contradicts all the positive forecast some market operators predicted for the Nigerian Stock Exchange’s performance in the last quarter of the year.

At the close of trading on Wednesday, the Exchange recorded the eighth day of consecutive losses totaling over N343 billion, the highest seen in five months.

The market capitalisation, which rose to N5.344 trillion two weeks ago, took a nose dive to close on Wednesday at N5.001 trillion; the NSE’s All-Share Index dropped to 21,202.59 basis points from 22,653.17, in the period in review.

Philip Nnadi, a chartered accountant and stock analyst, said the activities at the Nigerian capital market shows that it is yet to reflect the outcome of the reform exercise carried out by the Central Bank of Nigeria (CBN) in the banking industry, which controls about 80 per cent of the stock exchange.

He said, “I believe the capital market will rebound if investors can see the CBN’s actions as confidence booster for market players. When the economical problem of America started last year, its stock market went down. But when the banks cleaned their books by making provision for bad loans, their stock market bounced back. I expect the same scenario to happen in Nigeria by the time all our banks clean their books.”

Mr. Nnadi said the market is performing below expectation because, “Many market drivers are declaring losses because of the bad loans.” He added, “By the time they (the banks) would have all made full provisions for their nonperforming loans, and started declaring profits, the performance of the capital market should be positive.”

Wednesday’s trading

The decline in share prices deepened after Wednesday’s trading, as a total of 31 stocks depreciated in price, while 24 stocks recorded gains. The market capitalisation, which opened at N5.016 trillion closed at N5.001 trillion. About 688.754 million volumes of shares, worth N3.248 billion, were traded in 5,779 deals.

The banking sub-sector led on the activity chart as the most active sub-sector, with over 582.685 million shares, valued at N2.301 billion. The volume in the sub-sector was largely driven by the trading in the shares of Oceanic Bank International Plc, First City Monument Bank Plc, Diamond Bank Plc, Access Bank Plc, and First Bank of Nigeria Plc.

Trading activities in the Insurance sub-sector followed, with 36.318 million shares valued at N27.839 million. Volume here was boosted by deals in the shares of AIICO Insurance Plc, Standard Alliance Insurance Plc, Lasaco Assurance Plc, and International Energy Insurance Plc.

Unilever Nigeria Plc, Guaranty Trust Bank Plc, WAPCO Cement Plc, and Dangote Sugar Plc topped the price gainers’ chart with an increase of N0.83, N0.65, N0.55, and N0.50 per share, respectively.

Flour Mill Nigeria Plc, Africa Petroleum Plc, Julius Berger Plc, and Ecobank Nigeria Plc topped the price losers’ chart with a decrease of N1.87, N1.69, N1.34, and N0.92 per share, respectively.