Nigeria stock investors lost over N600bn in April
…buy sentiment subdued despite Q1 earnings season
Despite earlier expectations of portfolio realignment in favour of equities market, it never happened in April at the Nigerian bourse.
Rather, the market witnessed increased subdued buy sentiment leading to stocks value erosion in excess of N600 billion, amid influx of first-quarter (Q1) corporate scorecards.
“The equity market recorded more depreciations than appreciations in the last six years between March and April. This is an indication that the chance of depreciation in April 2019 is higher than the chance of an appreciation,” Lagos-based FSDH Research analysts had noted ahead of April month end.
Validating the analysts’ earlier views on stock market performance in April, the Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by 6.06 percent in the review month.
In four months to April 2019, the stock market decreased by 7.22 percent. The value of listed equities which opened the review month of April at N11.600 trillion stood at N10.959 trillion as at April 30, which implies value erosion of about N641 billion.
In the same manner, the NSE ASI which was 30,833.5 points as at April 1, 2019 declined to record low of 29,159.74 points as at April 30.
BusinessDay checks show that the record loss in April was largely felt by investors in equities like Berger Paints plc which has lost 14.5 percent of its value this year. Beta Glass plc lost -18 percent; Cement Company of Northern Nigeria (-27.8 percent); Champion Breweries plc (-28.1 percent); Conoil plc (-10.5 percent); Dangote Cement (-5.1 percent); Dangote Sugar Refinery (-8.9 percent); and Eterna plc (-6.4 percent).
“Given the sluggish recovery of the economy, we anticipate that the lingering bearish sentiments will remain in the near term as foreign investors continue to stay on the sidelines,” said Afrinvest Research analysts in their April 29 note.
Other stocks that their investors have lost huge sums this year are Ecobank Transnational plc (-25.4 percent); FBN Holdings (-8.2 percent); Fidelity Bank plc (-6.4 percent); Fidson Healthcare plc (-15.2 percent); Flourmills Nigeria plc (-29.7 percent); GlaxoSmithKline Consumer Nigeria plc (-37.9 percent); Guaranty Trust Bank plc (-4.2 percent); Guinness (-32.5 percent); Honeywell Flourmills plc (-13.3 percent); International Breweries plc (-34.4 percent); and May & Baker plc (-8.2 percent).
Stock investors in Medview Airlines have lost 12.2 percent of their year-open value; Mobil Oil Nigeria plc (-4.6 percent); MRS plc (-18.9 percent); NAHCO plc (-11 percent); Nigerian Breweries plc (-24 percent); NEM Insurance plc (-20 percent); Okomu Oil plc (-5.5 percent); PZ Cussons plc (-24.4 percent); and Seplat Petroleum Development Company plc (-10.2 percent).
Also on the loss path are stocks like Stanbic IBTC Holdings plc (-9.5 percent); Total plc (-18.2 percent); UAC of Nigeria plc (-28.7 percent); UAC Properties plc (-13.6 percent); UBA plc (-11.7 percent); United Capital plc (-6 percent); Unilever Nigeria plc (-16.2 percent); Unity Bank plc (-25.2 percent); University Press plc (-16.1 percent); Vitafoam plc (-4.5 percent); Lafarge Africa plc (-8 percent), and Zenith Bank plc (-7.6 percent).
Ahead of the release of the Nigerian Stock Exchange’s domestic and foreign portfolio investment report for April, the market recorded N97.63 billion foreign inflows three months to March 2019 as against N124.24 billion outflows.
In the absence of a positive catalyst, investors are guided to trade cautiously at the Nigerian Stock Exchange in the short term. Though, stable macroeconomic fundamentals and compelling valuation remain supportive of the stock market recovery in the mid-to-long term.
Considering the bearish sentiment that dominated last month’s sessions, some other analysts expect to see market trade in the same pattern in this month of May 2019, particularly as Q1 earnings season begins to wind down.
Despite the bearish forecast, Vetiva Capital analysts did not dismiss the possibility of investors taking advantage of beaten-down prices on select names.
Recently, stockbrokers under the aegis of past presidents of the Chartered Institute of Stockbrokers (CIS) identified critical issues that should be addressed for prompt stock market rebound.
“We must create savings institutions immediately. We are in dire need of Private Equity Fund and Hedge Fund in naira in the national interest. We need institutions that have deep pockets,” said Tola Mobolurin, Chairman, NASD plc.
Mobolurin, who is also the chairman of Capital Bancorp plc, sees need to end the dichotomy between banks with capital market operations and banks with non-capital market operations.
“We must reactivate the bond market which we pushed away because of lack of interest. Thriving capital market is needed to build the economy,” he said.
This is even as Mary Uduk, acting director general, Securities and Exchange Commission (SEC), advised stockbrokers to get to the heart of the government on the policies that would revive the market through advocacy.