Nigeria’s biggest listed companies may end 2019 on decade-low

The thirty biggest companies on the Nigerian Stock Exchange (NSE), excluding the Telcos, are set for their worst performance in ten years, underscoring an awful year for the domestic bourse which is one of the worst-performing globally.

The NSE30 index, which tracks the movement of price in the shares of the bellwethers, has declined 21.59 percent as of Tuesday with an annualized return of -22.83 percent.

This underperforms previous annual returns based on available data from January 15, 2009, to date.

While the analysis excludes MTN Nigeria and Airtel Africa, the two Telcos which listed in the course of the year and are yet to be included on the NSE 30 index, the grim outlook for Nigeria’s biggest firms shows a continued pessimism in the market since a record 42.3 percent rally two years ago.

So far this year around 20 percent of the NSE 30 companies currently on the index have noted an increase while the rest have declined with some already half their worth since the start of the year.

Outperformers include Access Bank (34.56%), Custodian Investment (6.19%), Union Bank of Nigeria (25%), Sterling Bank (4.21%), Wapco (9.24%), and Fidelity Bank (0.49%).

MTN Nigeria has a year’s return of 19.19 but peer, Airtel Africa is struggling having lost a quarter of its value since listing.

Analysts say the downturn of the market which has lost 16.06 percent year-to-date (annualized return of -16.98%) reflects the broader economy which is yet to improve compared to pre-recession levels.

Companies in the economy have been struggling; 56 percent of NSE 30 companies reported a decline in profit by half-year and in the third quarter earnings across the board was weak.

Investors are unsure about what policies the government would announce and how it would affect their investments; they are wary about how unpredictable the government and regulators are.

Despite prices at a record low, the stock market has stubbornly remained down with investors largely uninterested.

 The peaceful outcome of the general elections, rally in oil price earlier in the year, and listing of two Telcos giants have been opportunities for a rebound. When the price rose, it was short-lived.

More recently, both the NSE and the Central Bank of Nigeria have made efforts towards improving the market such as increasing the minimum trade quantity required to change prices for equity securities, and the Apex Bank restricting access to its OMO Bills in hopes of steering domestic funds back to the stock market.

Short-lived as well, the impact of that policy has waned off with the market on a week-long bearish run as of Tuesday, the longest streak of losses since early October.

The valuation of stocks in Africa’s biggest economy is much lower than the emerging market at African peers, but investors are more concerned about the growth prospect for the listed Nigerian companies.

Nonetheless, Financial Derivatives Company (FDC), led by renowned economist Bismarck Rewane, says there are brighter days ahead for the market next year which is “likely to be better than 2019”