Against fundamental assumption of investors rewarding companies for impressive financial records and anticipated market recovery on almost cleared political uncertainty, the Nigerian equity market has recently turned bearish defying expectations of analysts.
The Nigeria equities market on Tuesday closed on a negative note, as the All Share Index (ASI) dipped 1.02 percent to close at 31,313.36 basis points against previous day market decline by 0.90 percent.
The market on Tuesday saw investors lose a whopping N120 billion amid profit taking in market bellwethers as year to date worsen.
Analysis of year-to-date performance of the equity market shows returns currently stands at -0.37 percent. This however is the first time the market is entering the negative zone since it exited the zone on the 7th of February, 2019.
“There has been a lull in the release of financials by companies which should have strengthened the market, and investors are currently assessing the political space post-elections,’’ Gbolahan Ologunro, a Lagos-based equity analyst at CSL Brokers told BusinessDay.
Market performance on Tuesday has extended the bearish trend to a 5-day streak which started the week before despite relatively impressive company results which has been released so far this earnings season.
International Breweries recorded the highest loss as shares went down some 9.93 percent in the day to N24.05.
Other laggards in the day’s trading include Guaranty Trust which declined by 4.83 percent to N35.50 while Dangote Cement trailed by 0.51 percent to N194 per share at the close of trading.
According to Fola Abimbola, an equity analyst at FBNQuest, “The day’s performance is largely as a result of profit taking especially since the market had a more or less positive run to the general elections.’’
However, while Abimbola sees the market picking up over the near term “if the other results announced by companies for the 2018 full year are positive,” Ologunro says, “the near term might show a see-saw performance,” he expects profit taking and bargain hunting in the market in the near term.
Gainers for Tuesday was led by Law Union and Rock Insurance which appreciated by 7.69 percent to N0.56 in the day while UACN property development also saw its shares gain 7.14 percent to N1.95.
United Capital recorded an uptick of 4.13 percent to N3.28 while Wapco, Aiico insurance, Africa Prudential, Union Bank and Transnational Corporation rounded off the gainers table.
FBN Holdings however, was the hottest stock in volume terms as 60.14 million units of shares were trading in deals worth N493.12 million.
Overall, a total of 219.37 million shares valued at N2.93 billion were traded by investors in 3,345 deals on Monday.
The performance across sectors was bearish as only one out of five sectors covered closed in the green.
Industrial sector gained 0.24 percent in the day to outperform the market and the other sectors while Banking sector continued to slide southward, losing 2.26 percent in the day’s session.
Insurance sector saw a decline of 0.51 percent, and Oil and gas fell by 0.35 while Consumer goods sector was down by 1.30 percent at the close of trading, Tuesday.
David Ibidapo & Segun Adams
