Stock market posted N660bn loss in November

Stanley Opara

The bearish trend in the Nigerian equities market persisted in the month of November, leaving investors with a combined loss of N660bn.

The market has largely suffered from declines in trade value and volumes for a good part of the year, thus weakening investors’ participation and the market turnover.

As of the last day of trading on the floor of the Nigerian Stock Exchange in October this year, the NSE market capitalisation closed at N9.349tn, while the All-Share Index was 27,220.09 basis points.

But data from the NSE showed that by November 30, which was the last day of trading for the month, the NSE capitalisation stood at N8.689tn, while the NSE ASI was 25,241.63 basis points.

This, therefore, means over seven per cent decline in the NSE market capitalisation and investors’ worth in the one-month period.

Between September 8 and November 8 this year, the equities market recorded a decline of N396bn, which represented a fall of 4.18 per cent of the shareholders’ fortunes in two months. On November 8, the NSE market capitalisation plunged by N180bn for the day at the close of trading on the floor of the Exchange.

For the third quarter, investors in the equities market lost N432bn of their fortunes compared to the second quarter of the year.

In the space of three months, the NSE market capitalisation had slid to N9.733tn from N10.165tn. The NSE All-Share Index as of June 30 was 29,597.79 basis points, while at the end of the third quarter on September 30, it stood at 28,335.40.

The President, Fund Managers Association of Nigeria, Dr. Ore Sofekun, described the current state of the equities market as challenging for investors, adding that the prevailing economic recession was not helping the situation.

She called on investors to study trends in the market and make informed decisions if they were nursing a buy or sell consideration.

Sofekun also advised investors in the capital market to consider diversification of their investment portfolios to achieve a good spread of their investment risks.

The African Securities Exchanges Association recently urged all bourses on the continent to seek the elimination of capital gains tax on their securities and roll out new products like derivatives in the face of decreased interest from foreign and local investors.

Global funds, which sought African assets in the years up to 2015, have been cutting their holdings, due to the commodity price crash last year and the anticipated interest rates increase in the United States.

Adding to the challenge, economic growth in Africa this year is projected to be the slowest in two decades, reflected in bourses like the NSE, where daily volumes have shrunk by two-thirds to $10m, as foreign investors quit, put off by the slowdown and capital controls.

For instance, between September 28, 2015 and September 28, 2016, the NSE market capitalisation had dropped by N873bn from N10.572tn to N9.699tn; while the All-Share Index also fell to 28,236.23 basis points from 30,762.29 basis points.

There was also a significant drop in the volume of transactions in the market, as it dropped to 159.046 million from 266.652 million in the period.