Stock market routes to negative close amid pressure on heavyweights

Except for positive developments that could trigger investors’ buy decision at the Nigerian bourse; the market may close the week on a negative note following sessions of increased pressure across heavyweight stocks.

At the start of trading this week, Nigerian equities market had witnessed consecutive negative closes across key sectors, prompting many market watchers’ belief that this could weigh further on the All Share Index (ASI) in the session ahead.

Major buyers of Nigerian equities are re-pricing their risks after the National Bureau of Statistics (NBS) released series of disappointing economic data.

The second-quarter (Q2) 2016 GDP numbers showed an economic contraction of 2.06percent, confirming Nigeria is now in a recession, the first in the lives of over 60percent of the country’s population.

Also, inflation rate for July was high at 17.13percent, its highest since October, 2005 (18.6%).

Already, analysts see on-going trend of economic data impacting negatively on their outlook for the rest of 2016, as well as pricing of naira assets.

In their recent equity market brief, research analysts at Dunn Loren Merrifield said investors are showing preference for safe haven investment.

The analysts had early this week noted that the equity market may remain mixed in the absence of any catalyst to drive the market.

Likewise, research analysts at Lagos-based United Capital said equities extend losses as investors continued to book profit across the key sectors.

“We expect considerations around the strength and direction of domestic macro fundamentals to remain the guiding theme that will shape investment decisions in the near term,” United Capital analysts added.

“The negative closes across all key sectors amidst widening negative breadth and low trade volume suggests that market sentiment has become bearish. We believe this could weigh further on the ASI in the session ahead,” said market analysts at Vetiva Capital Management Limited in their recent note.

Recall that the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation appreciated by 1.11percent and 1.13percent to close last week at 27,756.67 points and N9.535 trillion respectively.

Similarly, all other Indices finished higher during the week in review, with the exception of the NSE Industrial Goods, index that declined by 0.24percent while the NSE ASeM Index closed flat.

Last week, the stock market recorded a turnover of 1.115 billion shares worth N13.817 billion in 16,083 deals in contrast to a total of 1.124 billion shares valued at N13.839 billion that exchanged hands the preceding trading week in 15,625 deals.

The Financial Services Industry (measured by volume) led last week activity chart with 993.823 million shares valued at N7.279 billion traded in 10,135 deals; thus contributing 89.11percent and 52.68percent to the total equity turnover volume and value respectively.

The Consumer Goods industry followed with 48.047 million shares worth N4.365 billion in 2,682 deals; and Conglomerates with a turnover of 31.648 million shares worth N109.579 million in 487 deals.

Twenty-eight (28) equities appreciated in price last week, higher than twenty-seven (27) equities in the preceding week.

Thirty-one (31) equities depreciated in price, higher than twenty-five (25) equities in the preceding week, while one hundred and twenty-one (121) equities remained unchanged, lower than one hundred twenty-eight (128) equities recorded in the preceding trading week.

Also traded in the review week were a total of 29,242 units of Exchange Traded Products (ETPs) valued at N283,495.57 executed in 42 deals, compared with a total of 16,397 units valued at N1.961 million transacted the preceding trading week in 37 deals.

Iheanyi Nwachukwu