Nigeria: Post-Election Apathy, Liquidity Shortfall Pare Investors' Fortune

A significant shortfall in availability of cash at the disposal of money market operators, occasioned by increased post-election apathy, has continued to fuel persistent sell pressure on the equities sector of the Nigerian Stock Exchange (NSE), causing investors' wealth to plunge further by 2.5 per cent as at Friday.

A review of market performance last week showed that all the indices closed lower, a development, which is currently constraining efforts to restore confidence in the nation's bourse.

For instance, at the close of transactions last week Monday, the bears strengthened their grip, as the All-Share Index (ASI) plunged further by 0.9 per cent despite improved corporate performances.

The market depreciated by 287.85 absolute points, representing a dip of 0.90 per cent, closing at 36,232.66 points, while the market capitalisation decreased by N107 billion, closing at N11.798 trillion.

The downturn was impacted by losses recorded in medium and large capitalised stocks like Nestle Nigeria, Okomu Oil, Lafarge Africa, International Breweries and Ecobank Transnational Inc. (ETI).

On Tuesday, the losing momentum worsened with the composite All-Share Index consolidating five consecutive losing streak, as market capitalisation slumped further by N121 billion.

ASI declined by 323.30 absolute points, representing a decrease of 1.02 per cent, to close at 31,313.36 points. Similarly, market capitalisation shed N121 billion, to close at N11.677 trillion.

This time, the downturn was impacted by losses recorded in medium and large capitalised stocks like Mobil Nigeria, International Breweries, Guaranty Trust Bank, NASCON Allied Industries and Dangote Cement.

Furthermore, at close of transactions on Thursday, sell pressure in some blue chip stocks, especially Learn Africa and Transcorp Hotel, dragged market capitalisation by N56 billion.

ASI was down by 149.49 absolute points, representing an increase of 0.48 per cent, to close at 31,210.79 points, while market capitalisation decreased by N56 billion to close at N11.639 trillion.

The downturn was caused by majority of the same group of large and medium capitalised stocks like Nestle Nigeria, Dangote Cement, Transcorp Hotel, Eterna and Guaranty Trust Bank.

Analysts, at the weekend, attributed the lull to low liquidity, mixed earnings and outcome of the just concluded general elections, which observers say have come below expectations.

Chief among pointers to support their claim is that the governorship elections in all of six out of 29 states were declared inconclusive.

The Chief Research Officer of Investdata Consulting, Ambrose Omodion, said: "The prevailing negative sentiments started again after the 2018 lull situation that extended to early January, but reversed on inflow from smart money that took position ahead of the presidential polls, which outcome was against their expectation.

"This triggered their quick exit as reflected in the average traded volume and money flow index that have been declining since the re-election of President Muhammadu Buhari, despite the ongoing earnings season.

"One cannot also, ignores the expiration of Central Bank of Nigeria Governor, Godwin Emefiele on June 3, as investors are anxious to know who the replacement could likely be."

See What Everyone is Watching

More From: Guardian

Don't Miss

AllAfrica publishes around 600 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.