Investors suffer N331bn loss in stock market

Equities trading on the Lagos floor of the Nigerian Stock Exchange (NSE) continued a free fall for the ninth day yesterday, as the market capitalisation of traded equities dropped by N331 billion to close at N7. 755 trillion from N8.086 trillion it started the day’s business. 

This was as the All-Share Index (ASI) dropped 4.1 per cent or 963.21 points to close at 22,550.83 basis points. 

Performances across sectors were bearish as all sector indices closed in the red. The rout on WAPCO and Dangote Cement, the most capitalised stocks in the sector pulled the Industrial Goods Index southwards. Similarly, the Consumer Goods and Banking sector Indices fell 3.8 per cent and 1.6 per cent due to losses sustained in Nestle and Zenith Bank. The Insurance and Oil & Gas Indices lost 1.2 per cent and 0.8 per cent respectively.

Since January 4, 2016, when the nation’s bourse resumed trading for the year till date, investors have suffered over N2 trillion loss.

The losses suffered by stock market were in response to the decline in crude oil to $27 dollars per barrel, market analysts have said.

They also noted that the depreciation of the naira to N300 per dollar in the parallel market had also contributed to the free fall of stocks.

Speaking on the NSE outlook for 2016 at a media conference last week, the Chief Executive Officer (CEO) of the Exchange, Mr. Oscar Onyema said he would have been bothered if Nigeria was not losing the way it was, adding that the NSE was reflecting the state of the economy.

He said the bourse could fund the deficit of the 2016 budget, adding that the NSE had notified the government of the problems with the economy.

“The exchange has informed the government that there is a problem, and the government knows that there is a problem. I think that the way you approach the solution to a problem is multifaceted and we do not want to have any kneejerk reaction”.

“If you look at what happened in China, the government intervened and it did not succeed. In fact it created more panic, so we have to be careful in what we are asking for, there has to be appropriate analysis as to the best way to address fundamental issue. The market has to continue reflecting on what is going on in the economy

“Investors are voting with their monies, with the sell-down we have seen, people are trying to understand what the actual impact of this new policies that have just been rolled out,” he said.

He added that although the market was overreacting, the government needs to clarify its policies to edge the market.

“I think the market is overreacting and as people who take into full consideration, the potential impact, I think that we have seen some more pressure.”